Why European Brands Are Shifting From Bangladesh to India and What It Means for the Textile Industry

Synopsis: European apparel brands are increasingly considering India over Bangladesh due to rising political risks and tariffs. India’s $37 billion textile exports, 19.6 percent to the EU, combined with potential India-EU and India-UK FTAs, make it a strategic sourcing hub despite higher costs and capacity challenges.

Amid rising geopolitical risks, supply chain disruptions and changing trade dynamics, European brands are increasingly re-evaluating their sourcing strategies. Traditionally reliant on Bangladesh for cost-efficient manufacturing, many global players are now looking towards India as an alternative hub, driven by the need for supply stability, regulatory comfort and long-term scalability.

Of India’s $37 billion textile and apparel exports in 2024-25, the US was the largest destination, accounting for about 28.5  percent of shipments, followed by the EU with roughly 19.6  percent, while the UK alone made up about 5.4  percent of total exports, reflecting significant existing demand from Western markets that could grow further with improved trade terms and diversification of sourcing away from competitors.

European Apparel Brands Eye India

European and UK apparel brands, including Marks & Spencer, Primark, Next, C&A, and Mothercare, have begun exploring India as a key sourcing destination. The move comes amid rising uncertainties in Bangladesh, where political instability and new tariffs are prompting global buyers to reconsider their supply chains.

Uncertainties in Bangladesh

Bangladesh’s apparel sector is facing pressure due to uncertainties from proposed Free Trade Agreements (FTAs) with the UK and EU. Buyers are considering shifting sourcing to India, which offers lower tariffs and duty-free access, making it more cost-competitive. After nearly 25 years of duty-free exports, Bangladesh could lose orders as some UK and EU brands explore Indian suppliers to reduce costs and mitigate trade risks, putting established Bangladeshi manufacturers under potential market and demand pressure.

Brands are therefore looking at India as a more stable and strategically advantageous option. “Even if Bangladesh stabilises, buyers will not want to put all their eggs in one basket,” says industry experts, highlighting the need for diversification.

India’s Advantage and the Role of FTAs

India is gradually becoming more competitive due to the India-UK and India-EU Free Trade Agreement (FTA) talks, which aim to reduce tariffs on over 99 percent of India’s exports to the UK and remove similar trade barriers with the EU. If ratified, these agreements could make Indian textiles and apparel significantly cheaper for European buyers, helping India compete on par with Bangladesh.

According to Commerce Minister Piyush Goyal, negotiations with the EU are advancing positively, with a preliminary outline of the deal already prepared. The talks cover trade in goods and services, investment, intellectual property rights, and geographical indications, among other areas. India’s bilateral trade with the EU reached $136.53 billion in 2024-25, with exports at $75.85 billion, indicating strong potential for growth in textiles and apparel if the FTA is finalized.

Why Are Brands Shifting?

European brands are increasingly conducting factory audits and evaluations in Indian textile hubs, particularly in Tiruppur, Tamil Nadu. These evaluations help brands identify reliable suppliers and assess quality standards. Established players such as Marks & Spencer and Primark are exploring ways to expand sourcing from India to reduce concentration risk, increase supply chain resilience, and prepare for potential higher demand in the post-pandemic global market.

Stocks Likely to Benefit

These are companies that may benefit from a potential shift in global and European apparel sourcing toward India. Large exporters such as KPR Mill, Gokaldas Exports, Arvind Ltd, and Pearl Global are well-positioned due to their strong export presence in fabrics, yarn, and finished garments.

Execution and Cost Challenges 

Despite rising interest from European buyers, Indian garment manufacturers continue to face execution-related challenges. Many exporters should scale up capacity to consistently handle large, long-term European orders, which require high volumes, strict timelines, and uniform quality. Labour and compliance costs in India remain higher than in Bangladesh, putting pressure on margins, especially in price-sensitive apparel categories. 

As a result, European brands are currently in an audit and evaluation phase, closely assessing factory consistency, scalability, and delivery reliability before committing significant volumes. Sourcing decisions therefore remain measured and cautious, with buyers awaiting clearer visibility on FTA timelines and final duty structures, which will ultimately determine India’s cost competitiveness in the European market.

Looking Ahead

With ongoing FTA negotiations and shifting global sourcing trends, India’s apparel industry is at a pivotal moment. The combination of a stable political environment, competitive pricing, and a large skilled workforce makes India an attractive alternative to Bangladesh for European brands. Companies that are well-positioned to cater to international standards could see substantial growth, potentially transforming India into a major hub for global apparel exports.

The gradual shift of European apparel brands towards India reflects a broader strategy of supply-chain diversification rather than an abrupt replacement of Bangladesh. If India improves execution, controls costs, and finalises FTAs, it can gradually attract more orders and strengthen its position in global apparel supply chains.

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