ISLAMABAD: The All Pakistan Textile Mills Association (APTMA) has warned that India has become significantly more competitive in the European Union (EU) market, effectively neutralizing — and in several segments overtaking — Pakistan’s existing GSP+ advantage.
Former caretaker Commerce minister Gohar Ijaz said that the “zero-tariff honeymoon” for Pakistan’s exports to the EU is over, as the same zero-duty access is now available to all major regional competitors. He noted that Pakistan exported approximately USD 9 billion worth of goods to the EU last year.
“The government must enable industry to compete in the region by ensuring regional parity in energy, tax, and financing costs. Industry can no longer bear the burden of systemic inefficiencies. Decisions must be taken today — USD 9 billion in exports to the EU and 10 million jobs are at risk,” he said in a statement.
READ MORE: India-EU FTA: MoC weighing potential impact on exports
Commenting on the EU–India Free Trade Agreement (FTA), the APTMA stated that the EU remains a critical market for Pakistan’s exports. Approximately 27.2 percent of Pakistan’s total exports, valued at around USD 8.8 billion in FY 2025, are destined for the EU-27. Nearly 39 percent of Pakistan’s total textile exports —amounting to roughly USD 7 billion — are absorbed by this market.
Pakistan’s GSP+ status has therefore been central to its export competitiveness, providing zero-duty access on 66 percent of EU tariff lines. Currently, around 89 percent of Pakistan’s textile and apparel exports to the EU enter duty-free under GSP+ preferences.
Pakistan and India are direct competitors in the EU market, with textile and apparel exports of approximately USD 7 billion each. India competes head-on with Pakistan in key product categories, including garments, home textiles, and cotton-based products.
Prior to the EU–India FTA, Pakistan was in a relatively favourable position in the EU market. Its GSP+ status offered deeper tariff concessions and more favourable rules of origin compared to the standard GSP scheme under which India was a beneficiary. While Pakistan enjoyed duty-free access on 66 percent of tariff lines, India received only partial tariff reductions, with several textile and apparel products facing EU duties of up to 12 percent.
Moreover, India had begun graduating out of standard GSP eligibility after exceeding the EU’s export threshold levels, leading to the suspension of its GSP preferences in January 2026.
In the absence of an FTA, this development would have weakened India’s market access and allowed Pakistan to consolidate its competitive advantage in the EU market. However, this dynamic has now fundamentally changed.
Under the EU–India Free Trade Agreement concluded in January 2026, India has secured immediate duty-free access for 100 percent of its textile and apparel tariff lines, while Pakistan will continue exporting to the EU with duty-free access on only 66 percent of total tariff lines.
The EU–India FTA covers all major textile and apparel categories, including yarn, cotton yarn, man-made fibre apparel, ready-made garments, men’s and women’s clothing, and home textiles.
Copyright Business Recorder, 2026
Comments