Textile Council urges to cut energy costs, taxes to protect exports

January 28, 2026 (MLN):  Pakistan’s textile and apparel exports to the European Union are facing serious pressure following the conclusion of the India-EU Free Trade Agreement, which removes India’s tariff disadvantage and significantly weakens Pakistan’s competitiveness in the EU market.

The development poses a major risk to Pakistan’s export performance, particularly as the country’s existing advantage was largely dependent on preferential market access rather than structural strength.

Chairman Pakistan Textile Council (PTC) Mr. Fawad Anwar noted that Pakistan exports around $9bn worth of goods to the EU, with approximately 65% coming from value-added textile and apparel products.

Recent trade figures show Pakistan’s textile and apparel exports to the EU at $6.2bn in 2024, only marginally higher than India’s $5.6bn, showing how narrow the gap between the two competitors has been, according to a press release issued.

The elimination of tariffs on Indian garments under the India-EU FTA has effectively neutralized Pakistan’s previous preference advantage, while Pakistan’s GSP Plus status remains under close review, creating additional uncertainty for exporters.

Together, these developments place Pakistan’s EU-bound exports in a highly vulnerable position.

India is expected to gain market share in the EU due to a more competitive cost structure, including lower energy prices, relatively flexible wage conditions, targeted support for man-made fibres, and strong industrial incentive policies.

In contrast, Pakistan’s exporters continue to face high energy costs, rising wages not aligned with productivity, and a complex and heavy tax regime.

Without urgent corrective measures, Pakistan risks losing significant EU market share in key value-added segments such as knitwear, woven apparel, and made-ups, which are critical for employment generation and foreign exchange earnings.

The Pakistan Textile Council has urged the government to urgently lower the cost of doing business for export-oriented industries by reducing tax incidence, aligning wage policies with productivity, rationalizing industrial energy tariffs to regional benchmarks, and adopting an emergency export-focused strategy aimed at protecting Pakistan’s position in the EU market.

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