Pakistan’s former commerce minister Gohar Ejaz said the India–EU deal effectively ends Islamabad’s “zero-tariff honeymoon” with Europe, putting billions of dollars in exports under threat. In a post on social media, Ejaz cautioned that Pakistan’s industries, particularly textiles, could suffer major setbacks unless the government urgently reduces electricity costs, lowers taxes and improves access to affordable credit to help exporters remain competitive.

The India–EU FTA was signed on January 27 after nearly 18 years of negotiations, linking two economies that together account for about 25% of global GDP and nearly a quarter of the world’s population. The agreement is expected to come into force in 2027 and will provide India with near-complete tariff-free access to the European market for labour-intensive goods.

Pakistan’s anxiety stems from its reliance on the EU’s GSP Plus scheme, under which it has been allowed to export roughly 66% of its products to Europe duty-free since 2014. This preferential access has given Pakistan an edge over competitors such as India, which faced import duties of 9% to 12% on similar products, particularly textiles and ready-made garments. Despite this advantage, Pakistan’s textile exports to the EU stood at around $6.2 billion, compared with India’s $5.6 billion.

With the FTA, India is set to gain tariff-free access for nearly 95% of its exports to the EU, effectively eroding Pakistan’s earlier advantage. Compounding the concern is the fact that Pakistan’s GSP Plus status is due to expire in December 2027, with no certainty of renewal.

Industry leaders in Pakistan have echoed these fears. Kamran Arshad, chairman of the All Pakistan Textile Mills Association, said India would now be far more competitive in Europe, while FPCCI Vice President Saqib Fayyaz Magoon warned that once a market is lost, it is extremely difficult to regain.

The European Union remains Pakistan’s largest export destination, with bilateral trade estimated at about ₹1.10 lakh crore. Pakistan’s Foreign Office has said it is in contact with EU authorities to assess the impact of the India–EU agreement, arguing that the GSP Plus scheme has benefited European consumers by ensuring a steady supply of low-cost goods.

As the new trade landscape takes shape, analysts say Pakistan faces a narrow window to reform its industrial and export policies or risk losing a critical foothold in its biggest overseas market.