A prominent business leader today declared the nation’s textile sector is facing an ‘existential threat’ following the conclusion of the India-EU Free Trade Agreement, urging the government to treat the looming export crisis as a ‘National Emergency’ despite a broader economic recovery.
Mian Zahid Hussain, a veteran industrialist, warned on Friday that the new trade pact, along with a probable deal between the US and India, effectively neutralises Pakistan’s GSP Plus advantage by granting Indian textiles duty-free access to the European market.
Speaking to the business community, he highlighted that the country’s cost of production is already an estimated 34% higher than regional competitors such as Vietnam and India. This disparity is exacerbated by a severe cotton shortfall, with domestic production at just 5.54 million bales against a target of 10.2 million, forcing reliance on expensive imports.
‘Despite the Prime Minister”s relief, the “hidden tax” of cross-subsidies-amounting to Rs 5 to Rs 7 per unit-remains embedded in our energy bills,’ stated Hussain, who serves as President of the Pakistan Businessmen and Intellectuals Forum. He stressed that exporters cannot compete globally while subsidising power sector inefficiencies.
Hussain demanded the immediate implementation of a ‘Level Playing Field Tariff’ to permanently eliminate cross-subsidies and align energy costs with the 7-cent per unit rate enjoyed by regional rivals. While supporting export diversification through policies like the Mobile and Electronic Devices Policy 2026-33, he insisted that stopping the ‘bleeding’ in the textile industry must be the foremost priority.
The stark warning comes amid strong positive indicators for the domestic economy, which Hussain noted has officially shifted from stabilisation to an ‘acceleration phase.’ This is evidenced by a significant 10.37% surge in Large-Scale Manufacturing (LSM) and the Pakistan Stock Exchange reaching historic highs near the 189,000-point level.
The business leader welcomed the government’s recent ‘Industrial Relief Package,’ which includes reducing the Export Refinance Scheme (ERS) rate to 4.5% and cutting industrial power tariffs by Rs 4.04 per unit. He credited these measures for contributing to the revitalisation of manufacturing, where the automobile industry has posted 79% growth, followed by an 18% increase in petroleum products and a 10.9% rise in garment production.
Further signs of economic momentum include the HBL Manufacturing Purchasing Managers” Index (PMI) reaching a 10-month high of 52.8, which indicates that factories are reopening and employment is increasing.
In the capital markets, Hussain congratulated stakeholders on the upcoming transition to a T+1 Settlement System, set to begin on February 9. He described the move as a ‘modernization milestone’ that is expected to double market liquidity, boost investor confidence, and align the Pakistani bourse with major global exchanges.