India's EU deal set to challenge BD's garment dominance

India's newly announced free-trade agreement with the European Union (EU) could pose a serious challenge to Bangladesh's dominance in the European garment market, according to a report by Zee News.

The deal, aimed in part at offsetting pressure from higher US tariffs, will give Indian exports preferential access to the EU's 27 member states by eliminating or sharply reducing duties on a wide range of products.

Tariffs of nearly 12 percent on Indian textiles are expected to fall to zero, while levies on leather goods, marine products, handicrafts and jewellery will be reduced or removed altogether.

The agreement, concluded after almost two decades of negotiations, was formally announced on Tuesday by Indian Prime Minister Narendra Modi alongside European Commission President Ursula von der Leyen and European Council President António Costa.

Subject to approval by the European Parliament, the European Council and the Indian Parliament, the deal is expected to come into force in 2027.

According to Zee News, New Delhi believes the agreement will allow India to capture a significant share of Bangladesh's garment exports to the EU, currently Dhaka's largest single market.

Bangladesh has benefited from preferential access to the EU since 1975 under its Least Developed Country (LDC) status, rising to become Europe's second-largest garment supplier after China.

In products such as denim, trousers and T-shirts, Bangladesh has overtaken China in recent years.

In 2024-25, more than half of Bangladesh's total garment exports worth $19.71 billion went to EU countries.

India currently trails Bangladesh in the European apparel market, ranking behind China and Turkey. Other major suppliers include Cambodia, Vietnam, Pakistan, Morocco, Sri Lanka and Indonesia.

Speaking to Zee News, India's Commerce Minister Piyush Goyal said the EU deal could rapidly expand Indian textile exports to Europe from about $7 billion to as much as $30-40 billion.

"We were often asked how Bangladesh exports so much to Europe," he said. "They had duty-free access and captured a $30 billion market."

With Indian textiles set to enter the EU at lower tariffs and greater scale, analysts cited by Zee News warn that Bangladesh may face mounting pressure on both pricing and competitiveness in its core export market.