EU market slipping away for RMG sector

Although the overall EU market has shrunk and demand has decreased significantly, Bangladesh's loss of market share in the apparel sector is particularly alarming. The decline in Bangladesh's share of the EU apparel market is especially concerning. From January to May 2026, it exceeded 18 per cent, the highest among its competitors. In contrast, the market shares of China, Vietnam, and India declined only marginally. Meanwhile, Pakistan, Turkey, and Cambodia have improved their positions compared to Bangladesh.

Moreover, Bangladesh is set to graduate from the Least Developed Country (LDC) category to a developing country next year, after which it will no longer be eligible to enjoy duty-free market access under the existing LDC preferences. As Bangladesh loses its preferential market access under the EU's Everything But Arms (EBA) scheme, it will have to compete with its peers in the EU market while bearing higher tariff costs. This will undoubtedly make the challenges even more severe. India is also likely to strengthen its position in the EU market through the proposed EU-India Free Trade Agreement (FTA), and the preferential market access under the agreement may further increase India's market share.

Bangladesh is highly dependent on cotton-based fibres, while many competing countries are shifting towards man-made fibres. Moreover, the adoption of green technology in the apparel manufacturing sector has become a key requirement for bona fide buyers. Bangladesh's competitors are continuously improving in these areas. Despite Bangladesh Bank's various policy directives and refinancing facilities to support the RMG sector, these initiatives remain insufficient to bring about significant changes.

Securing an immediate trade arrangement with the EU to ensure preferential market access is now essential for Bangladesh's survival in the EU market. If the decline in market share continues, Bangladesh will lose its competitiveness further. LDC graduation is undoubtedly a matter of prestige, but it also brings the risk of future trade shocks. Therefore, the extension of certain LDC preferences, even after graduation, should be actively negotiated. Otherwise, the country may fail to achieve its ambitious export targets in the coming years.

Kawsik Azad Pronoy

A Banker