Indian textile stocks declined sharply in trade on February 10 after the U.S. and Bangladesh announced the conclusion of a reciprocal trade agreement that includes a zero-tariff mechanism for select Bangladeshi textile and apparel exports, as per a joint statement issued by the two governments.

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Shares of Gokaldas Exports fell over 5% to an intraday low of ₹796.45. KPR Mill and Arvind declined more than 4% each, while Pearl Global Industries dropped over 3.5% during the session. The fall came after a sharp rally in textile stocks last week following the announcement of the India-U.S. trade framework.

Details Of The U.S.-Bangladesh Trade Agreement

According to the joint statement released by the U.S. and Bangladesh, the agreement commits the U.S. to establish a mechanism under which a specified volume of Bangladeshi textile and apparel exports will be eligible for a zero reciprocal tariff rate.

The statement said the eligible volume will be determined in relation to the quantity of U.S.-produced textile inputs, such as cotton and man-made fibres, exported from the U.S. to Bangladesh. The two countries said the agreement would provide exporters from both sides with enhanced access to each other’s markets.

The overall reciprocal tariff rate on Bangladeshi exports to the U.S. has been reduced to 19%, according to the same joint statement. However, the zero-tariff window for select apparel products places Bangladeshi exporters at a cost advantage in the U.S. market.

Comparison With the India-U.S. Trade Framework

The stock reaction also reflected a comparison with the recently announced India-U.S. interim trade framework. India and the U.S. released the framework on February 6, reaffirming their commitment to negotiations under the broader U.S.-India Bilateral Trade Agreement, according to a joint statement by the two governments.

Under the framework, the U.S. agreed to reduce reciprocal tariffs on Indian exports of textile and apparel, leather and footwear, plastics and rubber, organic chemicals, home décor, artisanal products and certain machinery to 18%, subject to the successful conclusion of the interim agreement.

While the proposed 18% tariff represents a reduction from the earlier 50% rate on Indian textile exports, Indian companies will now face competition from Bangladeshi exporters benefiting from zero reciprocal tariffs on select goods, based on official statements.

Market Reaction Reflects Competitive Pressures

The U.S. and Bangladesh said their agreement builds on their longstanding economic relationship and aims to expand bilateral trade. The U.S. and India, in their February 6 statement, described their interim framework as a step toward balanced and mutually beneficial trade.

The decline in Indian textile stocks on February 10 reflected investor response to the updated tariff landscape following the announcements by the U.S., Bangladesh, and India, as per disclosures made by the respective governments.