Industrialists in Ludhiana urging the World Trade Organization (WTO) to revoke its least developed country (LDC) status for Bangladesh. Bangladesh has already benefited from these provisions, which allowed the country to drive its garment exports to Europe and other regions while attracting sourcing for international brands, these manufacturers argue. Meanwhile, India’s apparel, garment, and hosiery industries—especially in Ludhiana—have been severely impacted by these advantages, leading to business closures and many more on the verge of collapse.
Bangladesh was granted the LDC status WTO in 2006. Extending for a period of 20 years, the status gave Bangladesh benefits such as zero import duties on its garments in the UK, Europe, and several other countries. The LDC status also included duty-free and quota-free (DFQF) market access, allowing Bangladesh to access major markets like Europe and boosting its garment and textile manufacturing sectors. Moreover, the flexibility in tariff adjustments and the ability to maintain higher import duties helped protect local industries and spurred growth in Bangladesh’s manufacturing sector.
Despite the hoped expiration of Bangladesh's LDC benefits, the WTO has extended them with a three-year transition period, meaning these benefits will continue until 2029. This extension has led to massive growth in Bangladesh’s garment sector, with global brands shifting their sourcing from Ludhiana to Bangladesh due to cost efficiencies and tariff advantages. Lower production costs in Bangladesh, fueled by factors such as cheaper labor, have further contributed to the shift.
However, the impact of this extension on the Ludhiana’s industry has been devastating. Competition from Bangladesh has made it difficult for Ludhiana manufacturers to retain or expand their market share in foreign markets like Europe, says Vinod Thapar, Chairman, Knitwear Club.
Badish Jindal, President, World MSME Forum, emphasizes, Bangladesh has taken full advantage of the LDC benefits, but the declining industry in Ludhiana due to these advantages is cutting into the exporters’ profitability. The WTO must revoke these provisions, as Bangladesh’s economy is doing well now.
