Bangladesh’s apparel sector is bracing for intensifying competition and price pressure in Europe after the European Union and India concluded a comprehensive Free Trade Agreement (FTA) that will grant Indian clothing exporters zero-duty access to the EU market from 2027.
What changes with the EU–India deal
- EU tariffs on Indian apparel will fall from ~12% to zero
- The EU will liberalise 99.5% of imports from India over seven years
- European companies are expected to save €4bn annually in duties
- India gains a level playing field against existing duty-free suppliers
Why is Bangladesh exposed?
Bangladesh currently exports garments to the EU duty-free under the bloc’s LDC preference scheme, but this advantage will expire three years after LDC graduation (post-2029) unless a successor arrangement—such as GSP Plus or an FTA—is secured.
The EU already absorbs over 50% of Bangladesh’s garment exports, worth $19.7bn in FY2024–25, making it the country’s most critical apparel market.
According to Centre for Policy Dialogue, Bangladesh will become structurally less competitive once India enjoys duty-free access while Dhaka faces tariffs of up to 12.5%.
Market dynamics shifting
- Oversupply following recent US trade disruptions has made the EU the main battleground
- Buyers now hold greater bargaining power, pushing lower prices and shorter lead times
- Rivals like India and Vietnam will retain zero-duty access through FTAs
Industry response in Bangladesh
Leaders from the Bangladesh Garment Manufacturers and Exporters Association and the
- Faster diplomacy with Brussels for GSP Plus or an FTA
- Tax relief, energy support, and incentives to shore up competitiveness
- Acceleration toward higher value-added apparel, not just basic items
Bottom line
The EU–India FTA does not hurt Bangladesh immediately, but it reshapes the medium-term competitive landscape. Without renewed preferential access to Europe, Bangladesh’s garment sector risks margin erosion, order diversion, and job pressure in its single most important export market.
