The EU–India free trade agreement is causing worry in Dhaka as it provides India with market access benefits in key sectors like textiles, apparel, leather, and footwear, which have been crucial for Bangladesh’s exports to Europe. The deal comes at a critical time for Bangladesh, set to lose preferential access to the EU market as it graduates from LDC status in 2026.
For years, Indian exports to the EU faced high tariffs, but the EU–India FTA will eliminate duties on footwear from 17% to zero, and on apparel and textiles from 9–12% to zero, significantly boosting India’s competitiveness. This move threatens Bangladesh’s position, which had leveraged duty-free access as an LDC to grow its share of the EU apparel market rapidly.
Bangladesh’s success in the EU market was driven by tariff advantages and favorable EU rules of origin for LDCs, such as the single transformation rule. However, with competitors like India gaining permanent duty-free access through FTAs, Bangladesh’s competitive edge is diminishing, posing challenges for its garment exports in the EU.
The Indian government aims to increase textile and apparel exports to $100 billion by 2030, up from $40 billion, supported by various policies and investments. With the EU–India FTA potentially redirecting Indian exports from the US to Europe, Bangladesh faces heightened competition in the EU market, raising concerns about its future prospects.
