India is steadily emerging as a major competitor for Bangladesh's readymade garment (RMG) export thanks to its rising competitiveness, integrated supply chain, diversified textile sector and expanding trade agreements, especially with the European Union and the United Kingdom.
Although Bangladesh currently maintains a stronger position in global apparel exports for basic garments due to its scale, lower production costs, and specialisation in RMG, it could face severe competition in its largest export destination-the EU, economists and exporters said.
A competitive analysis has also been conducted by Bangladesh Garment Manufacturers and Exporters Association (BGMEA) in this connection which was presented at its recent emergency board meeting convened to identify reasons behind the sector's persistently declining export performance throughout the fiscal year.
Industry insiders said the United States' new tariff regime has prompted major garment-producing countries to shift their focus on the EU market to offset the impacts of higher tariffs and geopolitical uncertainties.
They noted that once India and the EU- Free Trade Agreement (FTA) comes into effect in early 2027, India's apparel and textile exports will enjoy zero duty which currently ranges from 9.0 per cent to 12 per cent. The FTA is therefore expected to substantially enhance India's competitiveness in the European market.
In contrast, Bangladesh is likely to face a tariff of around 12 per cent on apparel exports to the EU after graduating from least developed country (LDC) status, as it will lose duty-free access under the Everything But Arms (EBA) scheme, they said.
Even if Bangladesh's LDC graduation is delayed, it would face stiff competition with India once the EU-India FTA takes effect.
Besides, the FTA between the UK and India, effective from next month, will allow zero duty for the latter's textile and apparel from existing 8.0 per cent to 12 per cent, they noted.
Talking to the Financial Express, Managing Director of Ha-Meem Group AK Azad said India is emerging as a major threat to Bangladesh, as the neighbouring country will enjoy duty-free access to the EU market under the FTA.
When asked, Research and Policy Integration for Development (RAPID) Chairman Dr MA Razzaque said "In the EU market, Bangladesh will face the most significant challenge as India will get duty-free market access."
He pointed out that EU FTAs generally require double transformation for garments, a challenge for countries with weak backward linkages like Bangladesh that remains largely dependent on imported raw materials, including cotton, yarn and fabrics, mostly for woven items.
India, however, is unlikely to face difficulties in meeting the EU's double transformation requirement because of its deep and integrated textile industry, he said, adding that this structural advantage is further reinforced by the country's export-oriented strategy.
Industry insiders said the Indian government has set a target of increasing textile and apparel exports to US$100 billion by 2030 from the current level of around US$40 billion. To achieve this, it has adopted a multi-layered policy framework that includes output-linked incentives, export rebate schemes to refund embedded taxes, input-side support, and extensive investments in infrastructure and logistics.
These measures reflect a sustained commitment to strengthening competitiveness, scale, and upgrading capacity, said Managing Director of Fashion.com Ltd Khan Monirul Alam. He said Bangladesh should seriously think of the growing competition and adopt measures accordingly.
Although apparel is not India's largest export category, duty-free, preferential access to the EU and UK markets will significantly enhance the country's competitiveness in price-sensitive sourcing decisions, particularly in cotton-based and blended garment segments, exporters said.
The EU is Bangladesh's major export destination, but in the wake of US tariff actions and trade policy adjustments, the European market has emerged as the principal battleground for global apparel exporters, intensifying competitive pressure.
They noted that this sudden oversupply has shifted bargaining power towards EU buyers, resulting in tougher negotiation terms with suppliers and shorter lead-time expectations while this dynamic has structural implications for Bangladesh's export margins.
Talking to the FE, BGMEA President Mahmud Hasan Khan said global buyers are also increasing their sourcing from India due to its increasing competitiveness mostly because of its integrated supply chain, cost advantages while it has diversified products with strong presence in hometex, technical textile and synthetic fibres.
Besides, the new and possible trade deals especially with the EU and the UK are also attracting international buyers, he added.
According to BGMEA, Bangladesh's key challenges include dependence on imported raw materials, rising wages and compliance costs, infrastructure and logistics constraints and potential loss of trade preferences after its graduation.
In contrast, higher labour costs, less specialization in mass-volume apparel manufacturing and a fragmented garment manufacturing sector are the major challenges for India.
The BGMEA concluded that while Bangladesh remains the stronger player in global RMG exports in the short term, India is likely to emerge as a formidable competitor over the longer term because of its broader and more integrated textile base. It added that future competitiveness will depend on improvements in productivity, sustainability, trade agreements, logistics, and continued duty-free market access.
By leveraging LDC duty-free access, Bangladesh has been able to expand its share of the EU apparel market at a remarkable pace.
China's share of EU apparel imports declined from 45 per cent in 2010 to 28 per cent in 2025, while Bangladesh's share rose sharply from about 7.0 percent to 21 per cent.
According to Eurostat data, Bangladesh garment exports to the EU stood at 19.41 billion euros in 2025 which was 14.29 billion euros in 2021.
On the other hand, India's apparel exports to EU increased to 4.52 billion euros in 2025 which was 3.39 billion euros in 2021.
Munni_fe@yahoo.com