One Deal, Three Setbacks: How India Gained an Edge Over Turkey, Pakistan, and Bangladesh With an EU Trade Agreement

A shifting trade landscape reshapes competition between emerging economies
India’s expanding trade engagement with the European Union has begun to reshape global economic competition, creating new opportunities for New Delhi while presenting fresh challenges for regional rivals such as Turkey, Pakistan, and Bangladesh. As negotiations around EU–India trade cooperation move forward, the effects are already being felt across textiles, manufacturing, and export-driven sectors.
Rather than a sudden disruption, this shift reflects a long-term strategic recalibration—one where India’s scale, policy reforms, and diplomatic outreach have aligned to strengthen its position in European markets.
Why the EU–India Trade Relationship Matters
The European Union is one of the world’s largest trading blocs and a critical export destination for developing economies. Preferential access to the EU can significantly boost competitiveness, especially in sectors like:
Textiles and apparel
Pharmaceuticals
Automotive components
Technology services
India’s growing alignment with EU standards and trade priorities has helped position it as a reliable long-term partner, particularly as Europe seeks to diversify supply chains away from overdependence on a single region.
India’s Strategic Advantage
India’s trade strategy with the EU has focused on:
Improving regulatory compatibility
Expanding manufacturing capacity
Strengthening labor and sustainability standards
Leveraging its large domestic market
These factors have increased India’s appeal as a production and sourcing hub. As a result, European buyers are increasingly viewing India as a stable and scalable alternative to other exporters.
This shift has not occurred in isolation. It has coincided with economic and political challenges faced by several competing economies.
Turkey: Facing Competitive Pressure
Turkey has long enjoyed strong trade ties with the EU, particularly in textiles and consumer goods. However, rising production costs, inflation, and regulatory uncertainties have begun to weaken its advantage.
India’s lower labor costs and expanding textile capacity allow it to compete aggressively in price-sensitive segments. Additionally, Indian exporters have invested heavily in meeting EU environmental and labor requirements, reducing compliance gaps that once favored Turkey.
While Turkey remains an important EU supplier, India’s growing presence has increased competition, forcing Turkish manufacturers to reassess pricing and market positioning.
Pakistan: Structural Challenges Exposed
Pakistan has traditionally relied on textile exports to Europe, benefiting from preferential access under EU trade schemes. However, several factors have reduced its competitiveness:
Energy shortages
Currency instability
Limited industrial diversification
India’s broader manufacturing base and improved logistics infrastructure have made it easier for European firms to source a wider range of products from a single country. This efficiency advantage has slowly shifted orders away from Pakistan in certain segments.
Trade analysts note that Pakistan’s challenge is not exclusion, but relative loss of market share as buyers diversify toward larger, more stable suppliers.
Bangladesh: A Narrow Export Base
Bangladesh’s success in the EU market has largely been built on ready-made garments. While this specialization has delivered growth, it has also created vulnerability.
India’s textile sector is more diversified, spanning:
Cotton and synthetic fabrics
Finished garments
Technical textiles
As EU buyers increasingly seek supply chain resilience, India’s ability to offer multiple product categories under one trade framework has proven attractive. This does not eliminate Bangladesh’s role, but it adds competitive pressure in areas where both countries overlap.
Beyond Tariffs: The Real Impact
The impact of India’s EU trade engagement extends beyond tariff advantages. Key non-tariff factors include:
Faster delivery times
Compliance with sustainability rules
Digital trade readiness
Policy stability
European firms are placing greater emphasis on transparency and long-term reliability. India’s reforms in taxation, digital infrastructure, and manufacturing incentives have helped address these concerns.
This shift highlights that modern trade competition is about systems and scale, not just price.
Geopolitical Context Matters
Global politics has also played a role. The EU’s interest in strengthening ties with India reflects broader strategic goals, including:
Reducing dependence on limited supply sources
Supporting democratic trade partners
Securing resilient supply chains
In this environment, India’s geopolitical positioning has enhanced its economic appeal. Turkey, Pakistan, and Bangladesh are not excluded, but they now operate in a more crowded and competitive landscape.
What This Means for Regional Economies
For Turkey, Pakistan, and Bangladesh, India’s progress is a signal rather than a defeat. Trade experts suggest that each country can respond by:
Diversifying export products
Investing in higher-value manufacturing
Strengthening compliance with EU standards
Improving energy and logistics reliability
Competition driven by trade agreements often encourages reform and innovation. In this sense, India’s success may act as a catalyst for broader regional upgrades.
India’s Next Challenge
While India has gained momentum, maintaining its advantage will require continued effort. European markets demand:
Consistent quality
Environmental responsibility
Labor protections
Policy predictability
Any slowdown in reforms or infrastructure development could weaken India’s position just as quickly as it improved.
Conclusion
India’s expanding trade engagement with the European Union has reshaped regional export dynamics, creating challenges for Turkey, Pakistan, and Bangladesh while strengthening India’s global standing. This outcome reflects strategic planning, scale, and sustained reform, rather than a single agreement alone.
In a rapidly evolving trade environment, success belongs to economies that adapt quickly and invest deeply. For India, the EU partnership offers opportunity. For its neighbors, it presents a reminder that competitiveness is not static—but something that must be continuously earned.