Key Points
- India dominated textiles, gems & jewellery, carpets, seafood exports
- Analysts warn Indian export volumes can plunge by up to 70pc
- US tariff hike on Indian goods presents strategic opening for Pakistan: Finance Adviser
- Pakistan must address structural challenges
- Production cost (power tariffs), tax rationalisation needed
ISLAMABAD: As the United States enforces 50% tariffs on a broad sweep of Indian exports, Pakistan stands ready to step into the gap, exporters and analysts said.
Major sectors such as textiles, gems & jewellery, carpets, seafood, and home textiles—traditionally dominated by India in the U.S. market—are now teetering under punitive duty burdens, opening a timely door for Pakistani exporters to expand their presence.
According to international media, the new U.S. duties hit about two-thirds of India’s approximately $87 billion in annual exports to America. Analysts warn of export volumes plunging by up to 70% in labour-intensive segments, potentially shaving 1% off India’s GDP and imperilling millions of jobs.
Pakistan, meanwhile, benefits from a significantly lower U.S. tariff of 19%, down from a previously proposed 29%, thanks to a recently finalised trade agreement. “The U.S. tariff hike on Indian goods presents a strategic opening for Pakistan,” said Finance Adviser Khurram Schehzad. “With one of the lowest tariff profiles in the region, we can deepen our trade and economic ties with the United States.”
Industry voices see rapid possibilities
In Faisalabad, the hub of Pakistan’s textile industry, optimism is mounting. “In the textile sector, the U.S. buys the most from India… but they’re facing 50% tariffs. That’s a huge difference,” said Asmat Khan, CEO of Amami Clothing. “Because of this, we’re getting daily inquiries. If this continues, the textile and apparel sector will see a huge boom.”
On the basmati front, Pakistan is already winning a pricing edge. A 6% advantage will emerge over Indian basmati exporters following the tariffs, according to industry stakeholders in Chandigarh.
In Karachi, policymakers are also rallying behind exporters. “We see this as a moment of opportunity to deepen trade and capitalise on our preferential tariff,” said a spokesperson from the Ministry of Commerce, echoing the government’s eagerness to showcase textiles, leather goods, surgical instruments, IT services, and agricultural products—key areas slated for better U.S. access.
Market potential and structural challenges
In 2024, Pakistan shipped about $5 billion worth of goods to the U.S., compared to India’s $77.5 billion and Bangladesh’s $10.7 billion. Though small by comparison, officials argue even marginal gains could translate into sizable dollar inflows.
However, industry leaders caution that structural issues must be addressed. Atif Ikram Sheikh, President of the Federation of Pakistan Chambers of Commerce & Industry (FPCCI), warned: “Tax rates, and high electricity and gas prices, are major obstacles to fully exploiting low tariffs as compared to India.” Meanwhile, Kamran Arshad of APTMA (textile mills) echoed doubts, citing elevated production costs and interest rates as significant hurdles.
How Pakistan can capitalise
- Immediate Outreach: Textile mills in Faisalabad, Karachi, and Lahore—orchestrated via TDAP and trade missions—should pitch stocked capacity and competitive pricing to U.S. buyers urgently impacted by Indian disruptions.
- Certification Readiness: Accelerate compliance with ESG standards (e.g., BSCI, WRAP), traceability systems, and product testing—especially for seafood, gems, and carpets.
- Diversification Push: Beyond textiles, Pakistan can highlight basmati rice, leather accessories, surgical instruments, and IT services—areas covered under the U.S. trade deal and poised for growth.
- Policy Support: Financial packages to subsidise energy costs and lower interest rates could help SMEs scale quickly to meet burgeoning demand.
Outlook: A narrow yet real window
The U.S. disruption marks a rare chance for Pakistan. As U.S. buyers scramble to replace Indian suppliers priced out by the 50% tariffs, Pakistani industries—with the right support—could solidify new business relationships. However, conversion hinges on swift action: speed, compliance, and cost-efficiency—not merely favourable tariffs—will determine who gains lasting ground.
