Karachi, Jan 30 (PTI) The recently signed Free Trade Agreement between India and the European Union (EU) has raised concerns within Pakistan's business industry, with financial analysts and exporters fearing that the pact could affect the cash-strapped country's textile industry and other exports.

India and the EU on Tuesday sealed a landmark free trade agreement -- billed as the "mother of all deals" -- under which 93 per cent of Indian shipments will enjoy duty-free access to the 27-nation bloc, while import of luxury cars and wines from the EU will become less expensive.

A leading financial expert on Friday warned that Pakistan should be prepared for tough competition, as India has opened a "new economic battle".

"They have signed trade deals with the EU and some other countries, which in turn will affect Pakistan’s exports and business,” Muhammad Ali Saya said.

He said that despite Pakistan's GSP+ status, which allows duty-free access for nearly 80 per cent of its exports to the EU, the textile exports were USD 6.2 billion in the first half of the current fiscal year, compared to India’s USD 5.6 billion exports, even though the latter faces a 12 per cent tariff.

The GSP+ status was granted to Pakistan by the EU in 2014, resulting in a 108 per cent increase in Pakistani textile exports to Europe due to concessional tariffs. The GSP+ would expire in December next year.

On Thursday, Foreign Office spokesperson Tahir Andrabi said Pakistan was in touch with the EU authorities to tackle any impact on its exports in the wake of the trade agreement between India and the 27-nation bloc.

“We are aware of this agreement. We have seen reports as well as the content,” Andrabi told reporters at his weekly press briefing.

Saya said that under the deal India has signed with the EU, it will secure zero-rated access, and Pakistan's exports could suffer.

Financial analyst Ali Shan, who works with capital investments, said that Pakistan could lose its competitive edge over India in the EU markets after the deal.

“The Pakistan government has to help its export industry and take corrective measures, or markets could be lost,” he said.

He said that corrective measures could include listening to the grievances of the textile, rice and cotton export industry and meeting their demands of lowering taxes, providing cheaper energy and smoother export and foreign exchange processes.

Shan said Pakistan has relied heavily on its textile, rice and cotton exports and has done well because of cheaper labour and natural resources over the years, but competition will grow now with the India-EU deal.

Saquib Fayyaz Magoon, chairman of the Businessmen Panel Progressive (BMPP) and vice president of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), said that the government needs to offer more incentives to exporters.

“Nowadays, it is very difficult to gain back a market once it is lost. We are now in an economic war with India, and our government must act accordingly,” he cautioned.

The EU remains Pakistan's largest export destination.

Magoon said that 25 per cent of Pakistan's exports go to the EU.

Faisal Arshad, who heads the Hosiery Manufacturers and Exporters Association (PHMA), said India-EU FTA could lead to aggressive price undercutting by Indian exporters in the EU market, an erosion of Pakistan’s market share in hosiery, knitwear, and value-added garments.

This would have a knock-on effect in the form of increased pressure on export margins, employment, and sector sustainability, he said.

He noted that while Pakistan, despite its GSP+ status in the EU, has to comply with several international conventions related to human rights, labour standards, environment, and governance. In contrast, India’s market access under the FTA does not carry the same obligations, he added. PTI CORR ZH ZH

India-EU free trade agreement may undermine Pakistan's textile and related exports, risking market share and margins. The India-EU Free Trade Agreement increases Indian exporters' duty free access to the EU, intensifying competition for Pakistan's textile, hosiery and related exports; Pakistan's GSP+ preferences, nearing expiry, may not prevent price undercutting, margin pressure and market share loss. Industry calls for government measures include tax relief, cheaper energy, streamlined export and foreign exchange processes, and enhanced incentives, while authorities engage EU contacts to evaluate impacts.