DailyPakistan.Online

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Quick snapshot: What the EU-India Trade Deal actually changes

The EU and India are negotiating a trade agreement that cuts many tariffs, opens up some service markets, and simplifies rules for where a product is considered "from." That mix makes Indian exports more competitive in Europe. For more context, read: Pakistan FM Dar Holds 'Very Productive' Discussions with Myanmar Counterpart: What the Talks Mean for Trade, Culture, and Regional Ties.

Sound familiar? Why does this matter? Because cheaper, faster access to the EU could shift orders away from other suppliers, including Pakistan.

Brief breakdown of the FTA terms that matter to Pakistan

• Sizable tariff liberalization for goods — many EU import duties on Indian goods would be reduced or removed over time, making Indian items less expensive on EU shelves.
• Improved services access — easier entry for Indian firms in areas like IT, consulting and selected professional services.
• Simplified rules of origin — products can qualify as “made in India” more easily even when parts come from elsewhere, reducing paperwork and delays.
• Regulatory cooperation on SPS and standards — closer alignment on sanitary, phytosanitary and product rules to cut inspection time and uncertainty.
• EU priorities include stronger environmental and labor provisions plus tighter intellectual property protections.
• India’s focus targets tariff cuts for textiles and apparel, processed foods and agriculture, leather goods and footwear, and selected industrial items.

Timeline and likely stages of implementation

Here's the kicker: tariff changes and market openings usually happen in phases, not all at once.

• Phased tariff cuts — sensitive lines may see reductions over 5–10 years; less sensitive items can move faster.
• Staged services access — different service sectors gain market entry on scheduled timelines.
• Safeguard clauses — temporary protections, quotas or transition measures can be applied if imports surge and harm domestic industries.
• Negotiations continue and details can shift; the summary here draws on public drafts and reports through mid‑2024.

Which tariff lines and sectors are on the negotiating table

Sector	What India wants	EU focus	Why Pakistan cares
Textiles and apparel	Large tariff cuts and looser origin rules	Labor and product-standard safeguards	Direct competition: lower EU tariffs for India reduce Pakistan’s price advantage.
Agriculture and processed foods	Access for processed items and duty reductions	SPS rules and food-safety alignment	India could capture markets for low-cost processed goods and some staples.
Leather and footwear	Tariff cuts plus origin flexibility	Sustainability standards and chemical restrictions	High overlap with Pakistani exports; contracts could shift.
Certain industrial goods	Lower duties and easier market access	IP protections and technical standards	Price-sensitive segments may switch to Indian suppliers.
Services	Gradual opening for selected services	Regulatory alignment and temporary movement of professionals	Competition for IT and business services where Pakistan also competes.

How tariff cuts plus eased rules of origin create trade diversion

• Lower tariffs make Indian goods cheaper in the EU than Pakistani goods still facing higher duties.
• Easier rules of origin let India use global inputs and still qualify products as Indian, cutting costs and red tape.
• Together, that creates trade diversion: EU buyers switch to Indian suppliers when price and paperwork favor them.
• Pakistan can lose orders directly to Indian exporters and indirectly if Pakistani inputs are replaced by India-sourced final goods.

Short takeaway: this deal does more than trim tariffs. It changes who can sell to Europe faster and cheaper. I've covered a similar topic in With 60% Under 30, Why Pakistan’s Gen Z Is Losing Faith in the Economy.

Another thing to consider: Pakistan will face real risks unless it adjusts policy or strengthens its trade pushes. Want a practical sketch of next steps Pakistan could take? For more context, read: From Cricket to Politics: How Pakistan Trails Behind India in Development and Global Influence.

Where Pakistan stands now: preferences, exposure and diplomatic levers

How GSP+ works and why Pakistan relies on it

GSP+ acts like a VIP tariff pass from the EU to selected developing countries.

It provides zero or reduced tariffs on many products in exchange for compliance with international conventions on human rights, labor and the environment.

Why does this matter? Because those tariff cuts reduce final prices in EU markets, helping Pakistani goods compete where margins are tight.

• Who benefits most: textiles and apparel, several industrial goods, and some processed foods.
• How it helps: lower import tariffs generally translate into lower shelf prices, which helps win price-sensitive orders in Europe.

Pakistan’s current trade exposure to the EU and India

Pakistan relies on preferential access to remain competitive in clothing and home textiles.

At the same time, India competes in many of the same product lines. An EU-India deal could narrow or eliminate Pakistan’s current price edge. For more context, read: India Suspends Visa Services for Pakistanis: Understanding the Implications and What Comes Next.

Data here are estimates to provide a sense of scale rather than exact shares.

Partner / Aspect	Role for Pakistan	Approx. share or note	Main overlap / competition
EU	Major export market accessed largely under GSP+	Significant share of textile and apparel exports	Competes on price and compliance with EU standards
India	Rising competitor for similar export lines	Growing share in textiles, processed foods, leather	May capture orders if EU-India deal lowers costs for Indian suppliers
GSP+	Tariff preferences that give Pakistan a price edge	Applies across many labour-intensive product lines	Loss of relative advantage creates vulnerability to diversion

Want me to outline targeted policy responses Pakistan could pursue, or sketch how exporters might adapt? Sound useful? If you're interested, I also wrote a guide on How the Current Pakistan Economy is Shaping the Future of Cricket in 2026.

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