Crisis looms over Pakistan cotton exports, India gains edge after EU and US trade deals
New Delhi (The Uttam Hindu): Pakistan is likely to face a major economic setback following India’s key trade agreements with the European Union and the United States. Experts believe these deals could directly impact Pakistan’s cotton and textile exports, weakening its competitive position in the global market.
India has agreed to a long-awaited free trade agreement with the European Union, while a new trade deal with the United States has led to a significant reduction in import duties on Indian goods. US President Donald Trump announced a cut in tariffs on Indian products from 50 percent to 18 percent.
Concerns rise in Pakistan’s industry sector
According to a report by Tribune, Cotton Ginners Forum Chairman Ehsan-ul-Haq expressed serious concern over the current situation. He warned that if the government fails to take immediate and concrete steps to support the cotton and textile industry, Pakistan’s exports could see a sharp decline. He said delays in policy decisions would further widen the cost gap at the regional level, weakening Pakistan’s grip in international markets.
Why India is gaining advantage
Industry experts said the situation became more challenging after the European Union reduced import duties on Indian products to zero. At the same time, the US lowered tariffs on Indian goods to a range of 18 to 25 percent. In contrast, Pakistani products still face tariffs of around 19 percent in the US market. Analysts said this tariff difference will give India a clear competitive advantage.
Demand for relief package from government
The Cotton Ginners Forum has urged the Pakistan government to bring domestic production costs at par with neighbouring countries to maintain export competitiveness. It has also demanded the release of long-pending refunds or their adjustment against super tax liabilities.
New path opened by India–US trade deal
On Monday, President Donald Trump announced the reduction of tariffs on Indian goods from 50 percent to 18 percent after talks with Prime Minister Narendra Modi. The India–US trade agreement had been under discussion for nearly a year. As part of the deal, the US has also placed a condition that India will stop importing oil from Russia.
‘Mother of all deals’ with the EU
The free trade agreement between India and the European Union is being widely described as the “mother of all deals.” Both sides have indicated that the agreement could be implemented later this year. According to Union Commerce Minister Piyush Goyal, once the deal comes into force, nearly 99 percent of India’s exports will get duty-free access to the EU. This is expected to double India’s exports over the next five years.