Pakistan Textile Sector Vulnerability After Eu-India Free Trade Agreement

Recent analysis from the Pakistan Institute of Development Economics (PIDE) warns that the newly concluded European Union-India Free Trade Agreement (FTA) could significantly increase Pakistan's trade vulnerability, particularly in the textile and apparel sector, which constitutes nearly 80% of its exports to the EU. The PIDE report highlights that while Pakistan currently benefits from the EU's GSP+ scheme, the FTA grants India permanent, treaty-based access with extensive tariff reductions, potentially raising India's exports to the EU by over 20%. This shift could lead to a reduction in Pakistan's market share and heightened competitive pressure, especially for small and medium enterprises that may struggle to adapt to these changes. The report emphasizes the need for coordinated policy actions to mitigate potential losses, including easing liquidity constraints and rationalizing energy costs (thenews.pk, February 27, 2026).