ISLAMABAD: Former Commerce Minister Gohar Ejaz has warned that deepeningtrade ties between India and major Western economies, particularly therecently concluded India-UK Free Trade Agreement and the advancing EU-IndiaFTA negotiations, could inflict devastating damage on Pakistan’s exporteconomy. He estimates that the combined effect may place approximately$9–10 billion worth of Pakistani exports—chiefly textiles—at direct risk,potentially triggering the loss of up to 10 million jobs across the valuechain.
Pakistan’s textile and apparel sector remains the country’s largestindustrial employer and single biggest export earner. Official figuresreleased by the Pakistan Bureau of Statistics and the All Pakistan TextileMills Association show that textiles and clothing accounted for roughly 60percent of total merchandise exports in FY2024, generating about $16.5billion, of which finished goods and made-ups destined for the EuropeanUnion and the United Kingdom constituted the single largest share.
Until 2020 Pakistan benefited from the European Union’s Generalized Systemof Preferences Plus (GSP+) scheme, which granted duty-free, quota-freeaccess for two-thirds of export lines. After the scheme’s partial rollbackand the parallel rise of India’s negotiating leverage, Pakistanimanufacturers now face a rapidly closing preference margin. Industryanalysts note that an eventual EU-India FTA featuring zero tariffs onapparel and home textiles would effectively neutralise Pakistan’s remainingadvantage.
Gohar Ejaz, who served as Federal Minister for Commerce until early 2023,argued during a recent address in Lahore that the India-UK deal signed inMay 2025 already eliminates tariffs on 90 percent of bilateral trade over aphased ten-year period. British import data indicate that Indian apparelshipments to the UK grew 18 percent year-on-year in the first half of 2025,while Pakistani consignments contracted 4 percent in the same period,reflecting early diversion effects.
The former minister stressed that Bangladesh, Vietnam and India haveaggressively expanded capacity and modernised production during the sametimeframe Pakistan struggled with energy prices 40–60 percent aboveregional competitors. He cited a 2024 World Bank enterprise survey showingthat Pakistani textile firms pay an average of 13.8 US cents perkilowatt-hour for electricity compared with 7.2 cents in Bangladesh and 8.1cents in India, severely eroding cost competitiveness.
Employment estimates presented by Ejaz align with earlier studies conductedby the Pakistan Institute of Development Economics and the Employers’Federation of Pakistan, which indicate that every $1 billion decline intextile exports translates into the direct and indirect loss of roughly0.9–1.1 million jobs. With women comprising over 40 percent of the formaltextile workforce, any large-scale contraction would disproportionatelyaffect vulnerable households in Punjab and Sindh.
Business leaders have repeatedly urged the government to restore regionallycompetitive energy tariffs, rationalise domestic taxes that inflateproduction costs, and expedite long-delayed refunds of input sales tax andduty drawbacks. The current export refinance scheme rate, hovering around9–11 percent, remains substantially higher than facilities available tocompetitors, further discouraging fresh investment.
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Ejaz also highlighted structural issues beyond energy and taxation.Outdated machinery, low labour productivity, and inadequate compliance withinternational environmental and social standards continue to limit accessto premium buyers who increasingly demand traceability and low-carbonfootprints. He warned that without urgent modernisation supported byconcessional financing, Pakistani mills risk permanent market share loss toIndian and Vietnamese suppliers.
Economic observers note that Pakistan’s overall merchandise exports havestagnated between $30–32 billion annually for the past four years, whileIndia crossed $450 billion in FY2024–25. The widening gap underscores theurgency of comprehensive export competitiveness reforms if the countrywishes to avoid a deeper balance-of-payments crisis.
Gohar Ejaz concluded by calling for a national emergency response plan fortextiles, including immediate reduction of energy input costs, acceleratedrefund disbursement, and targeted incentives for technology upgrading andproduct diversification into technical textiles and sustainable fibres.
Source: https://www.dawn.com/news/textile-export-pakistan-threat-india-uk-eu
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