Last Updated on January 30, 2026 2:32 pm by INDIAN AWAAZ
WEB DESK
Bangladesh’s readymade garment (RMG) exporters are set to face intensifying competition and mounting price pressure in the European Union after the EU and India concluded a landmark free trade agreement that will grant Indian apparel products duty-free access to the bloc.
According to reports published by The Daily Star, the EU-India free trade deal, announced on Tuesday and expected to take effect in 2027, will eliminate the existing 12 per cent tariff on Indian clothing exports. The move is widely seen as eroding a long-standing competitive edge enjoyed by Bangladesh in its largest export market.
Bangladesh currently exports garments duty-free to the EU under the bloc’s least developed country (LDC) trade facility, a benefit that will continue only for three years after its scheduled graduation from LDC status in November this year. Without a successor arrangement such as the Generalised Scheme of Preferences Plus (GSP Plus) or a bilateral free trade agreement, Bangladeshi apparel exports could face duties of around 12.5 per cent from 2029. “The implications will be significant, particularly for apparel,” said Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD), warning that Bangladesh’s competitiveness in the EU market will weaken once India gains permanent duty-free access.
The EU is Bangladesh’s single largest garment destination, accounting for over 50 per cent of total RMG exports, worth $19.71 billion in FY25. Preferential access since 1975 helped Bangladesh emerge as the EU’s second-largest apparel supplier after China, overtaking it in categories such as denim, trousers and T-shirts. Industry insiders told The Daily Star that while the immediate impact of the EU-India deal may be limited, competitive pressure will build steadily.
Faisal Samad, director of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said India’s strengths – its raw cotton base, skilled workforce and strong state support – would increasingly challenge Bangladesh in price-sensitive segments. Analysts also warn that the deal comes at a precarious time, as shifting US trade policies push global apparel exporters to focus more aggressively on Europe. A research note by BRAC EPL said oversupply in the EU market has already shifted bargaining power toward buyers, squeezing suppliers’ margins and shortening lead times.
Business leaders in Bangladesh have described the EU-India agreement as a “wake-up call,” urging Dhaka to urgently strengthen trade diplomacy, secure GSP Plus status, or negotiate a bilateral FTA with Brussels to preserve market access. Without swift policy action, economists caution that Bangladesh’s export model – built heavily on preferential margins – faces serious sustainability risks as competitors lock in permanent duty-free access to Europe.