Pakistan has begun reviewing the implications of the newly signed European Union–India Free Trade Agreement (FTA), as industry leaders and exporters raised serious concerns that the deal could undermine Pakistan’s competitive edge in the lucrative EU textiles and apparel market.
At a press briefing, Foreign Office spokesman Tahir Andrabi reiterated Islamabad’s commitment to strong trade ties with the EU, underscoring the long-standing Generalised Scheme of Preferences Plus (GSP+) that has provided Pakistan duty-free access on most exports. However, the new FTA grants India immediate tariff-free entry across all textile and apparel tariff lines, a shift that exporters say could neutralise Pakistan’s long-held export advantage.
Exporters Sound the Alarm
Industry representatives warned that zero tariffs for Indian goods could erode Pakistan’s share in Europe’s textiles market, a sector that accounts for a substantial portion of the country’s foreign exchange earnings. Saquib Fayyaz Magoon, Senior Vice President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), stated that Pakistan’s comparatively thin advantage — hitherto supported by GSP+ access — is now at risk of disappearing altogether. He urged policymakers to take swift action to protect the industry and retain market share.
Exporters and trade bodies called on the government to introduce measures such as reducing energy costs, simplifying tax structures, and enhancing exporter incentives to help Pakistani producers remain competitive. Magoon emphasised that once export markets are lost, regaining them can be extremely difficult.
Industry officials also highlighted structural disadvantages such as higher production costs and power tariffs, which could further weaken Pakistan’s position relative to India, particularly in segments such as ready-made garments, knitwear, and value-added textiles.
Economic Stakes and Strategic Concerns
Trade analysts noted that Pakistan’s textile exports to the EU were valued at around USD 6.2 billion in 2024, slightly above India’s export figures under previous tariff regimes, but represented a significant share of total shipments to Europe. With Indian exporters now competing on equal tariff terms, Pakistan’s historical edge derived from GSP+ preferences — covering around two-thirds of tariff lines — has effectively been neutralised in key export categories.
Former commerce officials warned that USD 9 billion in annual exports and up to 10 million jobs tied to the textile value chain could be threatened if urgent policy changes are not enacted to bolster competitiveness.
Government Response
While the government says it is assessing the broader implications of the EU–India trade deal, exporters remain cautious, urging expedited reforms and targeted support to safeguard Pakistan’s export performance and prevent erosion of market share in the European Union — one of their most significant overseas markets.
