By Uzma Ehtasham
The prospect of a free trade agreement between the European Union and India has raised serious alarms for Pakistan’s export sector, with the country’s textile industry appearing particularly exposed. Analysts at the Pakistan Institute of Development Economics (PIDE) have cautioned that such a deal could dramatically intensify competition in European markets, threatening a substantial portion of Pakistan’s exports. At the heart of the concern is India’s potential to secure permanent tariff concessions, a move that could unsettle Pakistan’s Generalized System of Preferences Plus (GSP Plus) status and erode the preferential access that has long underpinned its trade with Europe. For decades, Pakistani textiles have formed the backbone of the country’s export economy, providing livelihoods for millions across cities such as Faisalabad, Karachi, and Sialkot.
These industrial hubs, renowned for their garment and leather production, could soon face mounting pressure as manufacturers struggle to maintain market share against Indian competitors armed with lower tariffs. The PIDE report forecasts that Indian exports to Europe could rise by as much as 20 per cent under the agreement, amplifying the competitive challenges for Pakistani producers. Small and medium-sized exporters, already operating on thin margins, are expected to be the most vulnerable, while the broader export sector must contend with persistent structural challenges, including high energy costs and elevated interest rates. Trade experts warn that the impact could extend beyond immediate business concerns, with significant economic and social consequences.
Losing market share in Europe, where Pakistan has traditionally enjoyed strong demand, would not merely shrink revenues; it would threaten jobs and livelihoods across communities that depend heavily on textile production. In Faisalabad’s bustling factories, Karachi’s export-oriented hubs, and Sialkot’s leather and sports goods workshops, workers and owners alike face a stark choice: adapt swiftly or risk being left behind. The urgency for a coherent government response has never been clearer. Experts are urging policymakers to formulate a comprehensive trade strategy that safeguards Pakistani access to European markets, strengthens export competitiveness, and mitigates risks posed by global trade shifts.
Without such interventions, Pakistan risks losing ground in a sector that not only drives economic growth but also underpins the livelihoods of millions of ordinary citizens. The PIDE warning serves as a timely reminder that international trade is a fluid and fiercely competitive arena. Agreements negotiated far from Islamabad’s corridors can have immediate repercussions for local industry, exposing vulnerabilities that require careful planning and strategic foresight. In the past, Pakistan’s textile exports have benefited from preferential arrangements and protective measures that shielded them from some global pressures. The emergence of a free trade deal between the EU and India, however, threatens to level the playing field in ways that may not favor Pakistani producers.
While policymakers grapple with these challenges, the broader message is clear: trade policy cannot be reactive. The success or decline of Pakistan’s export sector in Europe will depend on pre-emptive action, industry preparedness, and an ability to adapt to rapidly shifting conditions. Ignoring the potential impact of India’s growing presence in European markets could leave local manufacturers struggling to compete, with ripple effects felt in communities, factories, and households across the country. For the textile industry, this is more than a matter of business; it is a question of survival. Every order, every shipment, and every contract carries weight not just for company balance sheets but for the workers who stitch, cut, and assemble the goods that have long defined Pakistan’s place in global commerce.
In such a context, tariff concessions for Indian exporters could act as a formidable disruptor, squeezing Pakistani margins and undermining competitiveness. The government’s role, according to economists, must go beyond rhetoric. Crafting a robust trade strategy involves both defensive and offensive measures—protecting existing markets while exploring new avenues for exports. Supporting innovation, encouraging diversification of product lines, and negotiating safeguards in trade deals can help Pakistani producers retain their foothold in Europe. Without such a strategic approach, the country risks ceding ground to a rival whose industrial base has been rapidly modernizing and whose cost structures increasingly undercut traditional exporters.
Ultimately, the PIDE analysis underscores the delicate balance that governs global commerce. The EU-India free trade talks, while distant in geography, have immediate significance for Pakistan’s export economy. They highlight the interconnected nature of modern trade, where decisions in Brussels or New Delhi can ripple thousands of miles away, affecting production lines, employment, and national economic stability. The message is clear: Pakistan cannot afford to remain passive. Strategic foresight, timely action, and industry support are essential to ensure that the country’s textile sector remains resilient in the face of intensifying global competition. As negotiations continue and trade landscapes shift, the question for Pakistan is no longer hypothetical.
(The writer is a public health professional, journalist, and possesses expertise in health communication, having keen interest in national and international affairs, can be reached at uzma@metro-morning.com)
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