India-EU trade deal could wipe out Bangladesh’s textile dominance – find out how | World News

New Delhi: India’s textile industry is set for a transformation after signing the Free Trade Agreement (FTA) with the European Union. The agreement was hailed as the “mother of all agreements”. While the agreement promises huge opportunities for India’s exports, it also puts neighboring Bangladesh, long dependent on duty-free access to the European market, under serious competitive pressure.

For years, Europe’s $263 billion apparel market has been dominated by Bangladesh, China and Vietnam, while India has barely broken the surface due to tariffs that have made its products less competitive. This is now changing. With duty-free access under the FTA, India is expected to expand its exports to Europe, creating millions of new jobs and challenging Bangladesh’s long-standing dominance in the sector.

Analysts say the deal could transform the global textile market as India emerges as a powerhouse capable of supplying everything from traditional saris to high-end fashion.

The EU textile market is dominated by China with a 28-30 percent share, followed by Bangladesh with a 21-22 percent share, largely due to duty-free access. Türkiye and Vietnam also maintain their strong positions by benefiting from geographical proximity and duty-free privileges.

In comparison, India has captured only 5-6 per cent of the market so far and exports textiles worth around $8 billion annually. Taxes on India’s exports, ranging from 9 to 12 percent, have historically had limited competitiveness.

The new trade agreement changes the equation completely. Once implemented, Indian textiles will benefit from zero tariffs, placing India on the duty-free list along with Bangladesh and Vietnam and unlocking the full potential of the manufacturing sector.

Officials expect the deal to significantly increase exports, create new employment opportunities and reduce India’s dependence on the US market, which is the largest buyer of Indian textiles but frequently imposes trade barriers.

India currently exports approximately $36.7 billion worth of textiles internationally; which translates to around 3.19 lakh crore. So far only $7.2 billion of this has reached the EU. The trade agreement is expected to multiply this number in the coming years, increasing the demand for skilled labor and creating thousands of new jobs in the textile sector.

Analysts predict that India could double its EU exports to $15 billion within five years, which could directly or indirectly employ nearly 7 million people. The government aims to increase the workforce in the sector to 10 crore by 2030.

Bangladesh faces a challenge. The textile industry has thrived thanks to EU duty-free access, but India’s rise as a diversified and politically stable textile exporter with abundant raw materials could disrupt Dhaka’s market share. While Bangladesh focuses on basic garments such as t-shirts, trousers and jeans, India produces a wide range of products, from traditional saris to designer clothing. India’s steady supply of raw cotton and political stability give it a decisive advantage, leaving Bangladesh to navigate a future of increasing competition.

The India-EU trade deal is not only a turning point in economic diplomacy but also a potential turning point for the regional textile market. With exports set to rise, Indian manufacturers are ready to meet Europe’s growing demand, while neighboring countries are forced to rethink their strategies to maintain their place in one of the world’s most lucrative textile markets.