Brussels, (Unib Rashid) __ A proposed Free Trade Agreement (FTA) between the European Union and India could pose a serious challenge to Pakistan’s economy, particularly its textile sector, with potential losses ranging between 5 to 10 percent in export market share, according to multiple analytical sources.

The primary reason for this potential setback is Pakistan’s current GSP+ status, which allows duty-free access for most of its textile exports to European markets. Analysts warn that an EU–India FTA could significantly dilute this advantage by granting India similar or full duty-free access to the EU market.

According to economic assessments, such an agreement would undermine Pakistan’s preferential access to European markets and pose a substantial risk to its economic stability. With India likely gaining duty-free entry, Pakistan — which heavily relies on GSP+ concessions for low-tariff textile exports — could face a 5–10 percent decline in its EU export market share, especially in key sectors such as garments and apparel.

India, backed by a stronger industrial base, is expected to emerge as a more competitive duty-free supplier, directly challenging Pakistan’s textile and clothing exports in Europe. Pakistan’s GSP+ status currently supports nearly 75 percent of its total exports, largely dominated by textiles, but this advantage could diminish as competition intensifies.

Economic analysts further caution that Pakistan’s overall export revenues may decline by 5 to 10 percent, adding pressure on the country’s economy and balance of payments at a time of existing financial stress.

Meanwhile, since January 2026, the EU has already suspended GSP benefits on more than 87 percent of India’s exports due to the “graduation” mechanism — a move triggered by India exceeding maximum market share thresholds. This development makes a future EU–India FTA even more critical for India to regain competitiveness against countries such as Pakistan, Bangladesh, and Vietnam.

Experts emphasize that Pakistani policymakers and industry stakeholders must begin strategic consultations immediately to mitigate potential losses and safeguard the country’s export-driven economic sectors.