'Indian duty-free access threatens GSP Plus edge'

Exporters say EU-India, UK-India trade deals could erode advantage; call for lower costs

KARACHI:

Textile exporters have warned that duty-free access for Indian textile products to European Union (EU) and British markets under the EU-India free trade agreement and the United Kingdom-India trade agreement could erode Pakistan's competitive advantage under the Generalised Scheme of Preferences Plus (GSP Plus), saying improved trade concessions for competing countries would intensify competition and hurt the country's export potential.

SITE Association of Industry President Abdul Hadi said Pakistan's GSP Plus status with the EU had been a cornerstone of its export performance, providing duty-free access to the European market for approximately 89% of textile and apparel exports, but that this advantage was gradually eroding. He said rising industrial production costs and changes in global trade patterns had also emerged as threats, and that modernisation and value addition had become essential alongside policy stability and the exploration of new, non-traditional markets. The textile sector accounts for approximately 60% of the country's export earnings, with exports of $18 billion in fiscal year 2025-26.

During the first quarter of fiscal year 2026-27, textile exports increased 5.26% year-on-year to $5.026 billion, although maintaining this growth remained a major challenge because of rising production costs and global competition.

He said Pakistan continued to rely heavily on exports of relatively low-value-added products, including yarn, fabric and home textiles, limiting opportunities to generate higher earnings, and urged industries to adopt modern technology and the government to offer investment incentives for technical textiles, branded garments and other high-margin products. Declining domestic cotton production has increased the industry's dependence on imported raw materials, with expenditure on cotton imports rising 54.9% in fiscal year 2024-25, and he called for measures to improve domestic output and strengthen links between the agricultural and industrial sectors to ensure quality raw materials at affordable prices.