International fashion retailers are restructuring their global sourcing networks, with some long-term buyers shifting orders away from Bangladesh to other countries to spread operational, geopolitical and energy risks. The president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has also acknowledged this trend, noting that buyers are diversifying sourcing across multiple countries rather than relying on a single origin.

Key Points

  • Bangladesh plans to graduate from least developed country status on November 24, 2026, and the government has applied for a three-year extension, a process that has yet to be finalized.
  • In 2025, Bangladesh exported about €19.41 billion (roughly $21.8 billion) in garments to the EU, accounting for 21.57% of the EU's garment import market.
  • During the natural gas shortage, surveys showed that 55% of surveyed knitwear factories saw orders reduced or canceled, 78% experienced partial shutdowns, and 87% faced shipment delays.

EU Market: A Three-Year Window Left for EBA Benefits
After graduating from LDC status, Bangladesh will still retain the EU's "Everything But Arms" zero-tariff treatment for three years, rather than immediately losing duty-free access. But the competitive landscape is shifting during this window: Vietnam has already signed a free trade agreement with the EU, and the EU and India concluded FTA negotiations in January this year, with most Indian textile and apparel tariffs set to be eliminated once the agreement takes effect. For a supplier holding more than a fifth of the EU's garment import share, European buyers' alternative options are increasing.

BGMEA argues that Bangladesh should seek an FTA with the EU within three to four years rather than relying on GSP Plus arrangements. The long-term certainty of the EU-Bangladesh trade arrangement has become one of the variables in sourcing decisions.

Energy Shock Adds Another Test for Buyers
The natural gas shortage once disrupted industrial production and shipping schedules. Industry surveys showed that during this round of disruption, 55% of surveyed knitwear factories had orders cut or canceled, 78% experienced partial shutdowns, and 87% faced shipment delays, while factories also bore higher costs from switching to alternative fuels and transportation.

The situation has since improved markedly. Data from Bangladesh's state-owned Petrobangla shows that with the recovery of LNG supply, natural gas supply rose to about 2,600 million cubic feet per day in late September, up from about 2,300 million cubic feet per day a month earlier, and production in gas fields is also recovering. The BGMEA president likewise said the gas situation has improved significantly.

What It Means for the Industry
Beyond cost and quality, country risk is becoming an independent variable in sourcing decisions. Bangladesh has capacity, factories and an existing buyer base, but to retain orders it needs to turn short-term energy improvements into long-term stable supply and finalize a longer-term trade arrangement with the EU before the EBA window closes; otherwise, with Vietnam already having an FTA and India's access improving, the incentive to diversify sourcing will continue to grow.

Source: The next order: Will it go to Bangladesh? - Fibre2Fashion · Originally published on 2026-10-07