New Delhi: India’s historic Free Trade Agreement (FTA) with the European Union is poised to reshape the regional trade landscape, significantly reducing Pakistan’s long-held competitive advantage in the EU market, according to multiple media sources.
After 20 years of negotiations, India and the 27-nation EU bloc signed the landmark trade deal in New Delhi on January 27. The pact, hailed in India as the “mother of all deals,” connects two of the world’s largest economic entities, collectively accounting for almost 25 per cent of global GDP and a population exceeding 2 billion people.
For decades, Pakistan leveraged its Generalised Scheme of Preferences Plus (GSP+) status to secure duty-free access on roughly 66 per cent of its exports to the EU, giving it an edge over India in key sectors such as textiles and apparel. Indian exporters, in contrast, faced tariffs ranging from 9 to 12 per cent on comparable products, limiting their competitiveness. Pakistan’s textile exports currently stand at $6.2 billion, slightly above India’s $5.6 billion.
The new India-EU FTA alters this dynamic entirely. According to trade analysts, India now enjoys sweeping duty-free access to the EU, neutralising Pakistan’s tariff advantage and potentially surpassing it in several product categories. Compounding the challenge, Pakistan’s GSP+ status is set to expire in December 2027, leaving Islamabad with a narrow window to secure continued preferential treatment.
Pakistani industry leaders have voiced concerns over the impending shift. Kamran Arshad, chief of the All Pakistan Textile Mills Association, warned that “India has become significantly more competitive in the EU market, effectively neutralising and, in several segments, overtaking Pakistan’s GSP+ advantage.” Similarly, Saquib Fayyaz Magoon, vice president of the Federation of Pakistan Chambers of Commerce and Industry, told the Dawn that zero-rated access for India would “erase Pakistan’s advantage and could severely impact our exports,” noting the difficulty of regaining lost market share.
Government officials in Pakistan have acknowledged the looming challenge. Tahir Andrabi, spokesperson for the Ministry of Foreign Affairs, emphasized that the GSP+ scheme has historically ensured “an uninterrupted supply of affordable textiles and apparel to the EU,” but Islamabad is now actively engaging with EU authorities both bilaterally and through Brussels to address the issue. Former Commerce Minister Dr. Gohar Ejaz also cautioned that Pakistan’s “zero-tariff honeymoon” with the EU may be over, putting millions of jobs at risk unless systemic inefficiencies in energy, taxation, and financing are addressed.
The deal, when implemented, will allow nearly 95 per cent of Indian labour-intensive exports to enter the EU without tariffs. Indian consumers, in turn, will benefit from reduced prices on luxury goods such as cars and wines imported from Europe. Analysts suggest that while the FTA strengthens India’s global trade position, it simultaneously presents a double-edged challenge for Pakistan, which risks losing both its pricing advantage and preferential access in the EU market.
Multiple media reports highlight that Pakistan’s trade authorities are now racing to negotiate either a renewal of GSP+ status or other mitigation measures, as Indian exporters are expected to rapidly capture market share in the post-FTA landscape. The coming months are likely to see intensified diplomatic and trade engagements between Islamabad and Brussels as Pakistan seeks to safeguard its export-dependent economy.