REFAYET ULLAH MIRDHA

Bangladesh’s garment exporters are set to face tougher competition and growing price pressure in Europe after the European Union and India reached a sweeping free trade deal that will grant Indian clothing manufacturers duty-free access to the bloc.

The agreement, announced on Tuesday, is expected to come into force in 2027, following vetting by the European Council, the European Parliament and India’s parliament.

After it takes effect, the EU’s tariff on Indian apparel products will drop to zero from the existing 12 percent, potentially eroding a long-standing advantage enjoyed by Dhaka.

Under the deal, the EU hopes to double its exports to India by 2032 through the elimination and reduction of tariffs on 96.6 percent of traded goods by value, generating estimated savings of €4 billion in duties for European companies. In return, the EU will cut tariffs on 99.5 percent of goods imported from India over a seven-year period.

Bangladesh currently ships garments duty-free to the EU, but that benefit will continue only for three additional years after its graduation from the least developed country (LDC) bracket, scheduled for November this year.

“The implications will be significant, particularly for apparel,” said Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD). He warned that Bangladesh will become less competitive in the EU market once India secures duty-free access.

Riding on preferential access to the EU since 1975

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