Pakistan’s textile sector faces serious challenges after India signed a free trade agreement with the European Union. Experts warn the deal could hurt Pakistan’s $9 billion exports. The agreement eliminates EU tariffs on Indian textile products, narrowing Pakistan’s competitive advantage.
The EU accounts for 24% of Pakistan’s textile exports, making it a key market for garments and value-added products. Analysts say India’s zero-tariff access will pressure Pakistan to maintain prices and market share. Industry leaders fear the deal may end Pakistan’s preferential treatment under GSP+ status, which currently benefits exporters.
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According to JS Global and the Pakistan Textile Council, Pakistan’s competitive edge over India was already thin. The new deal allows India to compete with higher value-added goods, threatening local jobs and industrial growth. Officials warn that $9 billion in exports and over 10 million jobs could face risk if the government does not respond.
The EU Zero Tariff Cushion!
The $9 billion Exports Last Year to EU With Market Access at zero-tariff honeymoon is over as same Zero Tariffs to EU are now Applicable on All Main Regional competitors.
The Government of Pakistan must enable industry to compete in the region… pic.twitter.com/MWDK8jLd75
— Dr Gohar Ejaz (@Gohar_Ejaz1) January 28, 2026
Economic experts urge the Pakistani government to improve energy, tax, and financing conditions for exporters. They suggest policies to help local industry compete regionally and globally. Without immediate action, Pakistan may lose market share to India in EU markets, jeopardizing long-term textile growth.
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The EU remains Pakistan’s second-largest trading partner after the US. Observers note that structural inefficiencies in the industry must be addressed. Otherwise, Indian products may dominate European markets, further weakening Pakistan’s position in the global textile sector.