India-EU trade deal to place Pakistan at a competitive disadvantage: PHMA

KARACHI: Pakistan Hosiery Manufacturers & Exporters Association (PHMA) Chairman (South), Faisal Arshad Sheikh has expressed serious concern over the likely impact of the proposed India–European Union Free Trade Agreement (FTA) on the country’s textile and hosiery exports, warning that it would place Pakistan at a structural disadvantage despite its existing GSP+ status with the EU.

He urged the Prime Minister to take immediate notice of the issue and initiate urgent measures on a war-footing to safeguard Pakistan’s exports to the European market.

Sheikh said while Pakistan currently enjoys duty-free access to the EU under the GSP+ scheme — similar to the tariff access India is expected to receive under the FTA — the competitive environment remains unequal.

“Pakistan’s GSP+ access is conditional. We are required to ratify, implement, and continuously report on compliance with 27 international conventions related to human rights, labour standards, environment, and governance. India’s access under an FTA does not carry the same level of conditional obligations,” he said.

He explained that compliance with these conventions, although necessary and beneficial in the long term, imposes additional operational, administrative, and financial costs on Pakistani exporters. As a result, tariff parity alone does not ensure competitiveness.

“The real issue is cost competitiveness. Pakistan’s manufacturing cost is historically the highest in the region. India’s cost of production is significantly lower, which gives Indian exporters a natural advantage once tariff parity is achieved,” he said.

He pointed out that India benefits from cheaper energy, lower financing costs, large-scale manufacturing, integrated supply chains, and stronger logistics infrastructure. These factors allow Indian exporters to price their products more aggressively in the EU market.

“When tariff equality is combined with lower production costs and fewer compliance obligations, the competitive gap widens substantially against Pakistan,” he added.

Sheikh noted that Pakistani exporters have faced similar challenges in the past. He recalled that additional tariffs imposed by the United States on Pakistani exports had exposed the country’s structural weaknesses.

“Despite repeated warnings from industry, no meaningful steps were taken to reduce the cost of production or address core competitiveness issues. As a result, exporters were unable to absorb or counter those tariff shocks,” he said.

He warned that the proposed India–EU FTA presents a far more serious challenge, and repeating past inaction would have severe consequences for Pakistan’s commerce and industry. Similar situations in the past, he said, negatively impacted industrial growth due to the absence of concrete government measures. Faisal Arshad Sheikh further revealed that the PHMA has consistently raised these concerns at the highest policy levels.

Copyright Business Recorder, 2026