New Delhi: The recently concluded free trade agreement between India and the European Union is creating concern in Pakistan, where industry leaders fear it could hurt the country’s textile sector and threaten millions of jobs, a report has said.
The India-EU Free Trade Agreement was announced on January 27 after negotiations concluded between New Delhi and the European Union.
The deal is now under legal review before it is formally signed and is expected to come into effect next year.
Under the agreement, India is set to receive wide-ranging tariff-free access to the European market, including across textile and apparel categories.
This development has triggered anxiety in Pakistan, whose economy depends heavily on exports to Europe.
According to trade data cited by industry bodies, EU member states buy nearly $8.8 billion worth of Pakistani goods every year, accounting for about 27 per cent of the country’s total exports.
Of this, roughly $7 billion comes from textiles alone. In comparison, India sends a smaller share of its exports to the EU, making Pakistan more exposed to any change in European sourcing patterns, according to Assahifa report.
Since 2014, Pakistan has enjoyed major trade benefits under the EU’s Generalised Scheme of Preferences Plus (GSP+), which grants duty-free access to many products in return for commitments on labour rights, human rights and good governance.
At present, Pakistan gets duty-free access on around 66 per cent of EU tariff lines.
However, once the India-EU FTA is implemented, India is expected to receive tariff-free access across all textile and apparel categories, reducing Pakistan’s earlier price advantage in the European market.
Industry experts warn that even a small shift by European buyers towards Indian suppliers could have serious consequences for Pakistan.
Estimates suggest that a 15 per cent drop in Pakistan’s textile market share in the EU could lead to export losses of about $1.5 billion, as per the report.
Pakistan also faces internal challenges that could weaken its competitiveness. Industrial electricity tariffs in the country are said to be 25 to 30 per cent higher than those in regional competitors.
Textiles form the backbone of Pakistan’s export economy and are labour-intensive. Some industry estimates indicate that up to 10 million jobs could be at risk if the country loses a significant share of the EU market.
(IANS)
