Bangladesh's garment industry is worried about the free trade agreement between European Union (EU) and India as it may directly make a negative impact on exports from the country. The ongoing negotiations on the FTA may grant New Delhi, zero tariff access by end of this year or early next year. The EU provides duty free access to Bangladesh and Pakistan under its 'everything but arms' program while Indian products are, as of now, subject to payment of about 12 per cent duty.
Players in Bangladesh fear that the country might lose competitiveness in basic garment products like T-shirt and home textiles if India-EU FTA gets through. The move may pose a huge challenge for the country putting pressure on its garment exports since the trade preferences will lead to boom in production of basic garments and home textiles in India.
Indian is already at an advantage over Bangladesh due to its strong raw material base. Bangladesh’s garment export segment is now demanding that the government must ensure backward linkage industries and investors in these sectors get all necessary support. It also feels that Dhaka should beef up diplomatic efforts to make the EU understand the FTA would hit the apparel industry hard, which employs over four million workers, mostly women.