EU-India Proposed FTA Deal: BD At Risk Of Losing Market

EU Bangladesh trade relations

Special Correspondent

Bangladesh is most likely to lose completeness to India in the EU markets as the India and EU will sign FTA in December 2026, cautioned business leaders, policy makers and economists.

The European Commission on September 11, 2026 put forward its proposals to the Council for the signature and conclusion of a Free Trade Agreement (FTA) between the European Union and India. If authorised by the Council, this will be the largest trade agreement ever concluded by the EU and India.

Once adopted and entered into force, the agreement will improve market access, reduce tariffs, tackle unnecessary barriers to trade, as well as provide predictable rules for trade and investment between the EU and India. The EU and India already trade over €180 billion worth of goods and services per year, supporting close to 800,000 EU jobs. This deal will eliminate or reduce tariffs on 96% of EU exports to India. Overall, the tariff reductions will save around €4 billion per year in duties on European products. It will make it easier for European companies to access the Indian market and compete on a more level playing field, while it will ensure consumers can benefit from increased choices and more competitive prices.

The proposal put forward represents a key step towards ensuring that consumers and businesses can start reaping the benefits of this deal as soon as possible. This is in line with the fast-track procedure laid out by Commissioner for Trade and Economic Security, Maroš Šefčovič earlier this year. The procedure aims at speeding up the implementation of FTA's, which is crucial at a time of geopolitical uncertainty and growing pressure on the global trading system.

The EU-India FTA reflects the EU's commitment to strengthen economic ties with key partners in the Indo-Pacific region. With its proposals, the Commission is seeking Council's approval to sign the agreements which will then require European Parliament's consent, before conclusion and entry into force. The Indian authorities are in parallel going through their own internal ratification procedures. 

Maroš Šefčovič, Commissioner for Trade and Economic Security; Interinstitutional Relations and Transparency has said, “Our focus has been clear from the start: to ensure that businesses and citizens feel the tangible benefits of this landmark FTA as quickly as possible. Timing matters, which is why we are now following through by submitting our proposals to the Council for signature and conclusion in record time. This agreement brings together two of the world’s largest economies — a market of 2 billion people and around a quarter of global GDP. It will very soon start creating new opportunities for both trade and investment,” said Maroš Šefčovič.

Vietnam and India, Bangladesh's major competitors in garment exports to the European market, have already signed FTAs with the EU.

Commerce Minister Khandakar Abdul Muktadir said last month that Bangladesh will formally begin discussions with the European Union next month on signing a free trade agreement (FTA).

He made the remark while speaking as the chief guest at a seminar titled "Halal Ecosystem in the ASEAN Region: Prospects for Bangladesh", organised by the Bangladesh Institute of International and Strategic Studies (BIISS).

The European Union is the largest export market for Bangladesh. As a least developed country (LDC), Bangladesh currently enjoys duty-free market access to the bloc under the Everything But Arms (EBA) scheme, which will remain in place for three years after the country graduates from the LDC category.

Bangladesh has long been seeking an FTA with the EU as it prepares to lose LDC-specific trade preferences.

The minister further said Bangladesh is preparing to sign bilateral FTAs with Malaysia and Indonesia at the earliest possible time.

"We are taking initiatives to sign FTAs to ensure preferential market access for Bangladeshi investors in global markets before LDC graduation," he said. Negotiations on FTAs are also underway with another 10 to 12 countries."

Nuria Lopez is a Spanish entrepreneur and the founding Chairperson of the European Union Chamber of Commerce in Bangladesh (EuroCham), while talking told that Bangladesh should complete talks with the EU on FTA and sign a deal to remain competitive in the EU markets.

The European Union Chamber of Commerce in Bangladesh (EuroCham), was established in December 2024 to strengthen trade and sustainable investment between the EU and Bangladesh. As Managing Director of Zalo Knitting Limited, she brings over three decades of business expertise in the country. Under her leadership, EuroCham advocates for investor-friendly reforms, including stable energy tariffs, streamlined approvals, and green infrastructure development. She plays a pivotal role in fostering EU–Bangladesh economic collaboration and advancing commercially sustainable, resilient growth.

Former BGMEA President Anwarul Islam Parvez said that Bangladesh is most likely to lose market share in EU if the country loses its competitiveness.

Bangladesh-EU trade stood at €22 billion in 2024 and out of that Bangladesh exports stand at 20b and EU stands  €2 billion.  In the meantime, the EU countries are also putting pressure on Bangladesh to reduce the wide trade gap with them. The relations between the USA and the EU countries have suffered in recent times over the war imposed on Iran.

According to newspaper reports, Bangladesh’s readymade garment (RMG) exports to the European Union (EU)—its largest global market—experienced a severe contraction during the first six months of 2026, dropping 16.43% year-on-year to €8.64 billion.

According to Eurostat data compiled by Bangladesh Apparel Voice (BAV), overall EU apparel imports from the world contracted by 9.70% to €41.10 billion during the January–June period.

However, Bangladesh’s export earnings declined at nearly double the rate of the broader EU market contraction, underscoring critical competitiveness vulnerabilities alongside shrinking European consumer demand.

Bangladesh's RMG shipments to the EU fell to €8.64 billion, down 16.43% YoY compared to the same period in 2025.

The decline was driven by simultaneous drops in both export volume (-8.22%) and average unit price (-8.94%), leaving manufacturers shipping fewer garments at lower prices.

EU’s total apparel imports shrank 9.70% to €41.10 billion, impacted by persistent inflation, high interest rates, geopolitical tensions, and reduced consumer discretionary spending.

June export figures offered slight relief with a 0.87% YoY increase to €1.37 billion, supported by a 6.53% rise in volume, though average unit prices continued to slide by 5.31%.

With Bangladesh's scheduled LDC graduation approaching, long-term duty-free market access under the EU’s Everything But Arms (EBA) initiative faces eventual transition, placing added urgency on securing GSP+ eligibility.

(From the print edition – GreenWatch. Please also see greenwatchbd.com home page)