Pakistan’s Ministry of Commerce has said that the proposed free trade agreement between the European Union and India will not create an immediate threat to Pakistan’s exports.
The ministry shared this update with the National Assembly Standing Committee on Commerce. It explained that Pakistan will continue to benefit from zero-duty access under the EU’s GSP+ scheme, even after the EU–India Free Trade Agreement (FTA) is implemented.
EU Is Pakistan’s Largest Export Market
The European Union is Pakistan’s biggest export destination. It makes up about 28% of Pakistan’s total exports.
In the fiscal year 2024–25, Pakistan exported goods worth $9.01 billion to the EU. More than 90% of these goods entered the EU market without any customs duty under the GSP+ scheme.
Key Sectors Benefiting from GSP+
Pakistan’s main export sectors under GSP+ include:
Ready-made garments
Home textiles
Hosiery
Leather products
Footwear
Ceramics and glassware
Chemicals
Surgical instruments
Textiles and apparel are the most important sectors. They made up nearly 80% of Pakistan’s total exports to the EU last year.
How the EU–India FTA May Affect Trade
Currently, both Pakistan and India export almost the same amount of textiles to the EU — around $7 billion each year.
However, there is a key difference:
Pakistan enjoys zero-duty access under GSP+.
Indian textile exports face average duties of around 11% under Most Favoured Nation (MFN) rules.
Once the EU–India FTA comes into effect, these duties on Indian goods are expected to be removed. India is likely to receive special access on about 97% of tariff lines.
However, the EU will still protect some sensitive agricultural products, including:
Sugar
Ethanol
Rice
Wheat
Beef
Poultry
Milk powder
The ministry said that the EU does not give extra tariff cuts beyond GSP+ for sensitive products like rice and ethanol. This means Pakistan’s current advantage, especially in textiles and clothing, will remain unchanged for now.
Importance of GSP+ Compliance
Pakistan must continue to follow the rules and conditions of the GSP+ scheme. The fifth review of the scheme is currently ongoing.
The government is also working to:
Lower production and energy costs
Support exporters
Hold talks with the EU on a possible Comprehensive Economic Partnership Agreement (CEPA)
Concerns from the Textile Industry
Despite the government’s confidence, Pakistan’s textile industry has raised concerns. Industry leaders say that India’s trade deals with the EU and the United States could reduce Pakistan’s export share in the future.
They also pointed out existing challenges such as:
High energy costs
Heavy taxation
Limited access to affordable financing
Exporters believe that if India receives better market access, competition will increase and pressure on Pakistani businesses may grow.
