Shawdesh desk:

Bangladesh’s readymade garment exports to non-traditional markets, especially India and Japan, would face significant challenges after the country’s graduation from Least Developed Country status in 2026, leading to higher duties.

Experts and exporters said that the government should immediately decide on its graduation timeline and apply for an extension, similar to its strategy with traditional markets like the European Union and Canada.

This graduation of Bangladesh from LDC in November 2026 would result up to 20 per cent in India and 9 per cent in Japan on garment exports to these countries, said a recent study.

According to a study by the Research and Policy Integration for Development, Bangladesh would face a 6.5 per cent duty on garment exports to China and a duty of 5.0-6.0 per cent in Australia.

Bangladesh’s readymade garment sector contributes 84 per cent of export earnings relies heavily on duty-free access to markets, with 72 per cent of earnings coming from countries provide such access.

Bangladesh Garment Manufacturers and Exporters Association former president Faruque Hassan told New Age that the government should differ the graduation of the country up to 2030 otherwise the export sector would face severe trouble.

He said that the graduation deadline had been set based on the fabricated data produced by the previous government and the interim government should apply to the UN to extend the time considering the data manipulation.

Faruque said that Bangladesh’s readymade garment sector remained competitive in the global market due to the duty free market access and after the graduation the access would be withdrew and export would suffer heavily.

He said that Bangladesh’s readymade garment sector has remained competitive in the global market due to duty-free market access, but this access would be withdrawn after graduation, causing significant damage to exports.

Bangladesh Knitwear Manufacturers and Exporters Association president Mohammad Hatem said that the country is not in a position in this tome to graduate from LDC.

He emphasized the urgent need to extend the graduation timeline beyond 2026, saying that without this extension, exports would decline significantly, putting additional pressure on employment.

RAPID chairman M A Razzaque said that the government should make a swift decision on whether Bangladesh would proceed with its LDC graduation in 2026 or apply for a deferral, as buyers and investors seek policy predictability.

Razzaque said that a fixed timeline reduces uncertainty for buyers and investors, helping to maintain stable trade relationships.

He suggested that a well-defined transition strategy and its effective implementation could help secure an extension of the graduation timeline.

Regardless of the graduation date, Razzaque stressed the importance of preparing for the transition, noting that exporters and businesses need a clear timeline to adapt to new trade rules and market conditions, particularly in a non-preferential market environment.

A fixed graduation date would also ensure timely domestic reforms, he added, highlighting that businesses in Bangladesh face high operational costs due to inadequate infrastructure, administrative inefficiencies, slow customs processes, and poor logistics—factors that undermine competitiveness and deter investment.

Revised data from the Export Promotion Bureau showed that in the financial year 2023-24, Bangladesh earned $548.83 million from garment exports to India, $1.08 billion from Japan, and $800 million from Australia.

According to the latest data, Bangladesh’s RMG exports to India, Japan, Australia, and Canada all saw notable increases in the first five months of FY25, while exports to China experienced a slight decline.

Exports to Japan in July-November of FY25 rose by 3.69 per cent, amounting to $496.20 million, compared to $478.57 million in the same period past financial year.

India saw a significant boost, with exports climbing by 16.48 per cent, from $279.06 million to $325.06 million in the first five months of FY25.

Similarly, exports to Australia in July-November of FY25 grew by 7.74 per cent, reaching $348.83 million, up from $323.77 million in the same period of FY24.

In the period Canada also contributed to the growth, with exports increasing by 13.22 per cent, from $459.80 million to $520.59 million.

However, exports to China in July-November of FY25faced a slight setback, dropping by 5.14 per cent to $86.71 million from $91.41 million in the same period of FY24, EPB data showed.