Textile stocks fall up to 6% for second day. How serious is the Bangladesh threat?

Shares of major Indian textile companies, including Gokaldas Exports and Arvind Fashions, faced declines of up to 6% for the second consecutive day, following a trade agreement between Bangladesh and the United States. This new deal allows Bangladeshi textiles made with U.S. cotton and man-made fibers to enter the U.S. market with zero tariffs, raising concerns about increased competition for Indian manufacturers. Despite these fears, JM Financial has reassured investors that while Bangladesh remains a competitive player in textile exports, the impact of this agreement on the overall market dynamics may be limited. The specific items eligible for tariff exemptions have not yet been disclosed, and analysts pointed out that India also benefits from lower tariffs when using U.S. cotton in its products. In addition to tariff reductions, the agreement includes provisions for Bangladesh to ease non-tariff barriers, aligning with U.S. regulations on vehicle safety and FDA certifications. This trade deal is expected to enhance economic ties between the U.S. and Bangladesh, although analysts remain cautious about its implications for Indian textile exporters.