A major agreement has been signed between the European Union and India. Dubbing it the “mother of all deals”, Indian Prime Minister Narendra Modi said the pact would open vast opportunities for people in both regions. Speaking at the inauguration of India Energy Week 2026 in Goa yesterday, he also described the free trade agreement (FTA) as a leading example of cooperation between two major economies.
However, the proposed FTA between the EU and India has raised serious concerns in Bangladesh, whose exports rely heavily on the ready–made garment sector. Exporters fear that if Bangladesh fails to secure a level playing field through its own FTA with the bloc, it risks losing apparel market share in Europe. They noted, however, that the impact of the EU–India deal on Bangladesh is likely to remain limited until the grace period after its graduation from least–developed country (LDC) status ends in 2029.
International trade analysts say Bangladesh must closely assess the implications of the EU–India pact which could carry significant and far–reaching consequences. The agreement could grant India tariff–free access for apparel exports. India has a large and resilient domestic base in yarn and fabric, allowing it to meet the EU’s stringent “rules of origin” for imports.
By contrast, what Bangladesh will receive from the EU after leaving the LDC group remains unclear. After graduation, the country may receive no preferential access for apparel in the European market. If so, the country would face a major challenge.
Analysts say Bangladesh must ensure it qualifies for the EU’s GSP+ scheme after graduation. Even with GSP+ status, however, Bangladesh would not enjoy duty–free access for apparel as its clothing exports to the European Union far exceed the thresholds set under the EU’s rules of origin for the concession. Failure to secure favourable terms on this limit would have a severe negative impact. If apparel were included in a potential GSP+ package, parity would be restored. Even on equal terms, however, Bangladesh would face much stiffer competition given the strength of India’s domestic backward linkage industries.
Dr Mohammad Abdur Razzaque, chairman of Research and Policy Integration for Development (RAPID), told Bonik Barta, “Following the conclusion of the EU–India FTA negotiations, Bangladesh must now move quickly to engage with the European Union. It must ensure it secures a strong deal with the EU after LDC graduation. Otherwise, Bangladesh will face intense competition. I believe the India–EU agreement will pose a challenge for Bangladesh in the coming period. Bangladesh has few export products beyond apparel, and garments are its largest export to Europe. As a result, competition for our apparel products in the EU market will intensify sharply.”
Asked whether the deal would have a direct negative impact on Bangladesh in addition to heightened competition, Dr Razzaque said, “Yes. If the current conditions for receiving GSP from the European Union remain unchanged, it could have a major adverse impact on us. As an immediate step, we must engage with the European Union. We must ensure Bangladesh receives GSP+ benefits in the EU and, at the same time, secures duty–free access for ready–made garments. Under GSP+, Bangladesh would be required to meet a two–stage transformation rule under the rules of origin; this must be negotiated down to a single–stage requirement.”
In a statement issued yesterday announcing the conclusion of the negotiations, the EU said the European Union and India had concluded negotiations yesterday for a “historic, ambitious and commercially significant free trade agreement (FTA), the largest such deal ever concluded by either side.” The statement further said the FTA agreement will strengthen economic and political ties between the world’s second and fourth largest economies, at a time of rising geopolitical tensions and global economic challenges, highlighting their joint commitment to economic openness and rules–based trade.
European Commission President, Ursula von der Leyen, said: “The EU and India make history today, deepening the partnership between the world’s biggest democracies. We have created a free trade zone of 2 billion people, with both sides set to gain economically. We have sent a signal to the world that rules–based cooperation still delivers great outcomes. And, best of all, this is only the start — we will build on this success, and grow our relationship to be even stronger.”
The EU and India currently conduct more than €180 billion in annual trade in goods and services, supporting about 800,000 jobs in the EU. The agreement is expected to double EU goods exports to India by 2032, with tariffs fully or partially removed on 96.6 percent of the bloc’s exports. Overall, the cuts will save European exporters almost €4 billion a year in duties.
The statement said EU–India FTA talks were first launched in 2007, suspended in 2013, and relaunched in 2022. The 14th and last formal negotiating round was held in October 2025. Separate talks on a Geographical Indications Agreement and an Investment Protection Agreement are ongoing.
The announcement has fuelled deep anxiety among Bangladesh’s garment exporters about the future. The EU is the single largest market for Bangladesh’s apparel. RMG accounts for more than 81 percent of the country’s export earnings by value, with half of all apparel exports going to EU countries. As a result, serious doubts have emerged over Bangladesh’s long–term ability to compete with India — a country with a strong base in yarn and fabric production — in this crucial market.
Responding to questions on the impact of the EU–India FTA and Bangladesh’s preparedness, Fazlee Shamim Ehsan, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), told Bonik Barta: “We have no preparation. The government should be preparing but is not. Instead, it believes nothing will happen to Bangladesh after LDC graduation. Since India is securing an FTA and we cannot at present, we should at least have sought a three–year deferral of graduation by applying in February. That would have given us six years to negotiate an FTA with the EU.”
He further said, “India needed at least nine to ten years of sustained effort to conclude its FTA talks. We would need at least nine years as well. Once the FTA takes effect, a 24 percent gap will open up between Bangladesh and India. Bangladesh now pays zero duty. After graduation, it will pay 12 percent. India currently pays 12 percent but will move to zero once the FTA comes into effect. That creates a 24 percent price gap between Bangladeshi and Indian products. The impact is therefore easy to foresee.”
He warned: “After the three–year grace period following LDC graduation ends, Bangladesh will have no chance of surviving competition with India.”
Commerce Secretary Mahbubur Rahman told Bonik Barta yesterday, “There has been communication on an FTA with the EU. Negotiations will begin once we receive their consent. It should not take long. The time the EU spent negotiating with India is not the standard.”
Asked whether the EU–India deal could affect Bangladesh’s ready–made garments, the commerce secretary said, “We don’t believe so. We are pursuing both GSP+ and an FTA with the EU. We hope to conclude talks quickly. In discussions with the EU ambassador to Bangladesh, their interest has been clear.”
According to Eurostat data, EU apparel imports from Bangladesh and India were valued at $18.27 billion and $4.18 billion respectively in 2024. In the first 11 months of 2025, the EU imported $18.05 billion worth of garments from Bangladesh and $4.24 billion from India, reflecting growth of 7.65 percent and 8.31 percent.
Exporters say a wide gap remains between the two countries’ export volumes. While the EU–India FTA may have no immediate effect on Bangladesh, they warn of a longer–term risk of losing market share if Dhaka fails to secure its own FTA with the bloc.
Inamul Haq Khan, senior vice–president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told Bonik Barta that no immediate damage was expected, as Bangladesh currently enjoys zero–duty access. “This will continue until 2029. We face no problem until then. During this period, we must urgently secure a preferential trade agreement and an FTA. We have been assured that the commerce ministry will complete both with the EU within this timeframe. We pointed out that India took 19 years to finalise its FTA, and that we are already very late. But the commerce ministry said that with four years available, Bangladesh will conclude an agreement. This process should have begun much earlier. For now, we can hold on until 2029. After that, we will lose markets unless we manage to secure a PTA or FTA within this period,” he said.
Industry sources say neighbouring India has recently rolled out aggressive policy support for its textile sector, including low–cost land, income tax exemptions on sales, targeted financial incentives for skills development, and infrastructure upgrades. Indian mills consequently receive subsidies of about 40 cents per kilogram, allowing them to export yarn to Bangladesh at prices 40–50 cents below production cost. By contrast, Bangladesh’s domestic spinning mills are struggling to compete with subsidised prices from rival countries. This is creating strain for entrepreneurs and putting investments at risk. Experts warn that weakness in the RMG sector’s backward linkage industries will further heighten Bangladesh’s vulnerability once the EU–India FTA is implemented.
RAPID Chairman Dr Razzaque said: “To remain sustainable in international competition over the long term, Bangladesh must not only strengthen its backward linkage industries but also significantly expand their scope. Recently, the United Kingdom granted Bangladesh duty–free market access after LDC graduation while retaining the single–stage benefit for garments. This means that even after an FTA with the UK, Bangladesh will enjoy parity with India in that competitive space. Efforts must be made to secure similar benefits from the EU to maintain a level playing field. At the same time, appropriate pricing policies must be applied to avoid the internal competition of pushing down prices.”
Sources in the commerce ministry and the EU Delegation in Bangladesh said the EU Delegation sent a letter to Commerce Adviser Sk Bashir Uddin in September outlining a series of concerns over Bangladesh–EU trade and investment ties. The letter identified 13 challenges, including non–tariff, regulatory, and other issues, affecting the depth and durability of the economic relationship. Of the 13 areas flagged, five relate to non–tariff barriers, while the remaining eight fall under regulatory, policy or other categories.
An official familiar with EU affairs told Bonik Barta that addressing the concerns raised in the letter would signal that Bangladesh has begun preparing for the FTA initiative it has announced and is treating the issue with due seriousness. If Bangladesh gives proper weight to the EU’s concerns, the official said, it would help create the conditions for an FTA. In other words, progress on these issues would make it easier to build a supportive environment for an agreement.