India’s new free trade agreement with the European Union could threaten Bangladesh’s long-held dominance in the European garment market.

The deal will give Indian exports preferential access to the EU’s 27 member states. Tariffs of nearly 12 percent on Indian textiles are expected to fall to zero.

Duties on leather goods, marine products, handicrafts, and jewelry will also be reduced or eliminated.

The agreement was announced after almost 20 years of negotiations. The deal still needs approval from the European Parliament, the European Council, and India’s parliament. It is expected to take effect in 2027.

Bangladesh has enjoyed duty-free access to the EU since 1975 under its least developed country status.

In the 2024–25 fiscal year, more than half of Bangladesh’s garment exports went to the EU. The total value was about $19.7 billion. The EU remains Bangladesh’s largest single export market.

Analysts warn that lower tariffs for Indian goods could intensify competition. Bangladesh may face pressure on prices and market share in its most important export destination.