'India will benefit from Bangladesh’s premature graduation’ from LDC status

Economist Mushtaq Khan expressed concerns over Bangladesh’s lack of preparation for graduating from the United Nations' list of Least Developed Countries (LDCs).

He believes if Bangladesh graduates from LDC status, it will lose tariff-free trade benefits, face higher interest rates on foreign loans, and domestic industries will be exposed to intense competition, potentially leading to the shutdown of many factories.

Mushtaq Khan, a professor at the School of Oriental and African Studies (SOAS), University of London, shared these views at a roundtable discussion titled “Bangladesh’s Graduation from Least Developed Country Status: Preparations and Realities,” organized by the organisation Change Initiative at a hotel in Dhaka's Gulshan area today, Wednesday.

Politicians, economists, academics, researchers, and government officials attended the event.

Mushtaq Khan also said competitor countries want Bangladesh to graduate from LDC status, as it benefits them. One of the main beneficiaries would be India. If Bangladesh loses its trade privileges, India stands to gain the most.

He warned that if Bangladesh applies to the United Nations to delay its graduation, competitor countries might oppose it. They will desire that the application of Bangladesh is not considered.

At the event, Change Initiative’s Head of Research, Ishtiaq Bari, presented an overview of Bangladesh’s graduation process. He noted that Bangladesh has met all three criteria for LDC graduation and is scheduled to officially graduate on 24 November 2026.

In some regions, Bangladesh will continue to receive tariff-free access until 2029, and patent-related exemptions for pharmaceutical production will last until 2033.

In his presentation, Ishtiaq Bari noted that no country can unilaterally delay its graduation. To do so, a country must submit a request to the UN Committee for Development Policy (CDP) with strong supporting arguments. The CDP will then evaluate the request and a final decision will be made by the UN General Assembly.

After the July mass uprising, the interim government initially considered delaying the graduation but later withdrew from that plan. On 13 March, the Advisory Council decided to proceed with the graduation as scheduled.
As an LDC, Bangladesh currently enjoys duty-free export privileges in markets like Europe, access to low-interest foreign loans, and the ability to impose higher tariffs on imported goods. Graduation would mean losing these benefits and facing more competition from imported products with lower tariffs.

Mushtaq Khan asked, "Can Bangladeshi producers compete with products from China and India? Are the country’s electronics, processed food, and pharmaceutical industries ready? Is Bangladesh overall ready?"
He said, "I don’t see the evidence."

He highlighted a major concern regarding apparel exports to the European market: automatic tariff imposition. If a country’s exports exceed a certain threshold of the EU’s total imports for a particular product, tariffs are automatically applied. Bangladesh’s apparel exports have already crossed that threshold. Even though the EU has granted Bangladesh tariff-free access for three more years, this automatic tariff mechanism could reduce competitiveness.

Mushtaq also noted that a major European buyer has expressed concern over Bangladesh’s premature graduation.

He mentioned that Bangladesh might still be able to request a few extra years before graduating, by presenting three evidence-based arguments to the UN Economic and Social Council (ECOSOC):

Premature graduation could increase poverty in Bangladesh, which is a concern ECOSOC takes seriously.

Ongoing instability in global trade caused by US President Trump’s trade wars makes graduation risky.

Fifteen and a half years of authoritarian rule have severely damaged Bangladesh’s institutions and economy, requiring more time for recovery.

Mushtaq suggested Bangladesh engage with other countries like Nepal and Bhutan, which are also interested in delaying graduation. If Bangladesh makes the request alone, competitors like India might block it—especially since relations with India are currently not favourable.

He proposed that Bangladesh form a coalition with like-minded countries and approach the United Nations together, increasing the chances of securing a delay.

BNP standing committee member Amir Khasru Mahmud Chowdhury was present as a special guest. He questioned the economic data compiled under the ousted Awami League government, which has been used to justify LDC graduation. He mentioned issues like the troubled financial and banking sectors, and lack of export diversification.

Amir Khasru said that the graduation decision should reflect the will of the people. Over the past 15 years, Bangladesh lacked democracy, but now hopes for a return. A future elected government should make the final decision, following debates in parliament.

He emphasised the need to initiate efforts to delay graduation and allow the people’s representatives to debate and decide.

Cynthia Mela, Country Director of the French development agency AFD, Ayub Bhuiyan, General Secretary of the Press Club, AKM Sohel, additional secretary of the Economic Relations Division, Nuria Lopez, Chairperson of the EU Chamber of Commerce in Bangladesh, Mohammad Asaduzzaman, Co-founder of Dhaka Institute of Research and Analytics and Md Zakir Hossain Khan, CEO of Change Initiative, among others, spoke at the event.