Banglanews24 - 10 May 2026
EU-India trade deal raises new concerns for Bangladesh apparel sector
Bangladesh’s apparel exporters are facing fresh concern after the European Union and India reached a free trade agreement, a development industry leaders say could intensify competition in Bangladesh’s largest garment export market.
The European Union is the biggest market for Bangladesh’s readymade garments. The country has long maintained a strong position in the bloc largely because of duty-free access under the EU’s Generalised Scheme of Preferences, or GSP, through the Everything But Arms arrangement for least developed countries.
But that preferential access is set to change after Bangladesh’s graduation from least developed country status. The duty-free benefit is expected to continue through a transition period until 2029, after which Bangladesh will need to secure a new trade arrangement, such as GSP Plus or a free trade agreement, to protect its competitive edge.
At such a critical time, the EU-India free trade agreement has deepened concern among Bangladesh’s apparel manufacturers. Industry insiders say global buyers are already looking more closely at India as a safer long-term sourcing option, making it urgent for Bangladesh to begin FTA talks with the EU and address domestic infrastructure and policy bottlenecks.
India-EU deal and the concern for Bangladesh
Trade analysts have described the EU-India agreement as a landmark deal. Under the pact, tariffs will be removed or reduced on more than 90 percent of traded goods, with India gaining preferential access for nearly all of its exports to the EU.
The agreement is expected to significantly boost India’s exports of readymade garments, leather goods and processed food. At the same time, European cars, wine and medical equipment are expected to become cheaper in India.
For India’s textile and apparel sector, the deal creates a major opportunity. As one of Bangladesh’s key competitors in garments and textiles, India is now positioned to expand its share in the EU market once tariff advantages under the agreement take effect.
Until now, Bangladesh has enjoyed duty-free access to the EU under the GSP/EBA scheme, while India had to pay tariffs on garment exports. The EU-India deal changes that equation. India also has a large domestic cotton base and strong backward linkage, giving it easier access to raw materials.
Industry people fear that the combination of local raw material strength and preferential access to the EU could allow India to capture part of Bangladesh’s share in the European market.
Buyers preparing for a shift
European buyers have already begun preparing for a possible sourcing shift following news of India’s tariff-free access, according to apparel leaders.
Bangladesh Knitwear Manufacturers and Exporters Association President Mohammad Hatem told Banglanews that one of the world’s largest buyers, H&M, was shifting some orders from Bangladesh.
“I have information that H&M is shifting its orders from Bangladesh. Within the next year, perhaps many more orders will move there. I have held a meeting with the H&M Bangladesh country director. Since India has completed an FTA and we have not yet done anything similar, the possibility of buyers shifting is strong,” he said.
Hatem said H&M had increased orders in Bangladesh every year until last year, but this year it had not done so.
“This year alone, they have not increased orders; rather, they have reduced them. There has been no other reason behind the decline in orders. The main reason is that they are moving towards India. They are gradually shifting their export orders to India,” he said.
BGMEA Vice President Md. Shehab Udduza Chowdhury expressed similar concern.
“Some buyers are already leaving Bangladesh. If we do not take quick steps, more buyers will leave in the future,” he told Banglanews.
Bangladesh still strong in EU apparel market
Data show that the European Union remains Bangladesh’s most important apparel market.
In the first nine months of the current fiscal year, from July to March, Bangladesh exported garments worth about $14 billion to the EU, accounting for around 49 percent of the country’s total RMG export earnings. During the same period, Bangladesh’s global garment exports stood at $28.58 billion.
Bangladesh is the world’s second-largest apparel exporter to the EU, while India ranks fourth. Bangladesh’s share in the European market is more than four times higher than India’s.
Eurostat data show that Bangladesh exported garments worth 18.31 billion euros and 19.41 billion euros to the EU in 2024 and 2025 respectively. India exported garments worth 4.18 billion euros and 4.52 billion euros to the bloc in the same years.
BKMEA President Mohammad Hatem does not think India will be able to capture Bangladesh’s market overnight only because of FTA benefits.
“We have many advantages. We can produce garments in huge volumes, we have long experience and we manufacture quality products. India cannot immediately take orders of the huge volume that Bangladesh is now exporting while maintaining international compliance standards. Such large factories have not yet developed there. But they are preparing, and we must be careful from now,” he said.
Call for quick FTA talks and domestic reforms
Local and foreign entrepreneurs and experts say Bangladesh must pursue a free trade agreement with the EU to face the emerging challenge.
Nuria Lopez, Chairperson of the European Union Chamber of Commerce in Bangladesh, or EuroCham, said Bangladesh was at a critical stage as it prepares to graduate from LDC status.
“At this stage, Bangladesh must have a free trade agreement with the EU. Regional competitors such as Vietnam and India have already made such arrangements. Bangladesh must move in the same direction to retain markets and investment. If there is no free trade facility in the largest market, there will be no scope to increase investment here,” she said.
Hatem said it was now more urgent to begin negotiations, even if the agreement itself takes time.
“At this moment, we have to take the initiative to conclude an FTA as quickly as possible. If buyers at least receive the message that Bangladesh has taken an initiative for an FTA, they will feel some comfort and their concerns will ease. The commerce ministry must take the main initiative,” he said.
Former BGMEA director Md. Mohiuddin Rubel said Bangladesh needed to be extra cautious because the trade strengths of Europe and India were more parallel and complementary.
“India has created the right environment for this agreement through increased investment in the textile industry, securing its own raw material sources and major infrastructure development, including port facilities. On the other hand, Bangladesh’s trade capacity with Europe is still quite uneven,” he told Banglanews.
“No country will agree to an FTA simply because we want it. It is a bilateral matter. The other country also has to receive some benefits. If we cannot ensure strong port facilities, infrastructure development and our own raw material supply like India, the EU may not be interested in an FTA with us,” he said.
Entrepreneurs said India’s exporters receive various incentives, including government support that covers part of workers’ wages, giving them an additional edge. They also urged Bangladesh to remove structural weaknesses at home.
Hatem said the energy crisis remained one of Bangladesh’s biggest problems.
“We need uninterrupted solutions for electricity and gas. The problems in the banking sector must be resolved, customs and legal complexities must be reduced, and a zero-tolerance policy must be adopted on law and order. If the government can do these things and move towards an FTA in a planned way, then, In Sha Allah, no one will be able to take our market away,” he said.
Analysts say Bangladesh can retain buyers if the government quickly ensures access to necessary raw materials, stronger backward linkage and infrastructure support. Otherwise, once duty-free access is lost after 2029, a large part of the apparel market could move to competing countries.
