What UAE–India Trade Means for Pakistan’s Textile Exporters

The United Arab Emirates (UAE) has become one of the fastest-growing hubs for global trade, serving as both a consumer market and a re-export gateway to the Middle East, Africa, and Europe. For Pakistan’s textile industry, which contributes nearly 60% of total exports and employs millions of workers as stated by the Pakistan Bureau of Statistics, the dynamics of regional trade carry enormous weight. Recently, India and the UAE deepened economic ties through the Comprehensive Economic Partnership Agreement (CEPA), a deal that has reduced tariffs and accelerated trade flows. This shift raises critical questions: what does closer UAE–India trade mean for Pakistan’s textile exporters, and how can they adapt to remain competitive?

UAE as a Textile Import Hub

The UAE is not just a buyer — it is a strategic re-exporter. According to Dubai Customs, over 50% of the UAE’s imports are re-exported to neighboring regions. In textiles, this means fabrics and garments that arrive in Dubai often make their way to Saudi Arabia, Qatar, and even Africa. For Pakistani exporters, this has historically been an advantage: Karachi’s proximity to Dubai allows for short shipping times and lower freight costs compared to competitors from East Asia.

India–UAE CEPA and Its Implications

In 2022, India and the UAE signed the Comprehensive Economic Partnership Agreement (CEPA), one of the fastest-negotiated trade deals in the region. As reported by The Economic Times, CEPA eliminated duties on 90% of Indian goods exported to the UAE, including a wide range of textile products. This has given Indian exporters:

• Zero-duty access on key fabric and apparel categories.

• Simplified customs procedures that reduce lead times.

• Stronger retail linkages with UAE’s fast-growing fashion and apparel sector.

For Pakistan, this creates a new competitive challenge: Indian suppliers now have both cost and regulatory advantages when targeting the UAE market.

The Impact on Pakistan’s Textile Exports

The risks for Pakistan are significant:

• Price Pressures: With zero-duty access, Indian products may undercut Pakistani yarn and fabric prices.

• Market Share Losses: UAE importers may shift preference to Indian suppliers who can offer lower landed costs.

• Supply Chain Shift: CEPA also allows India to position itself as a dominant textile supplier in GCC markets, where Pakistan has traditionally been strong.

However, Pakistan still has competitive edges:

• Proximity Advantage: Karachi–Dubai shipping routes are faster and cheaper than India’s inland-to-port logistics for many exporters.

• Yarn & Fabric Strength: Pakistan is one of the world’s largest cotton yarn producers, while India’s strengths lie more in finished garments.

• Diaspora Connections: A large Pakistani business community in Dubai continues to prefer working with suppliers from Pakistan.

Opportunities for Pakistani Exporters

Rather than seeing India–UAE trade as purely a threat, Pakistan can turn it into an opportunity by re-strategizing:

1. Focus on Value-Added Textiles
   Competing on price alone will be difficult. Pakistan must push value-added fabrics such as polyester-viscose blends, ready-to-dye fabrics, and fancy yarns that cater to fashion brands in the UAE.

2. Strengthen UAE Partnerships
   Pakistani exporters can develop direct relationships with UAE-based distributors, retailers, and garment manufacturers to secure long-term supply agreements, making it harder for Indian suppliers to displace them.

3. Promote Sustainability Credentials
   UAE buyers are increasingly conscious of sustainability. Highlighting eco-friendly fabrics, waterless dyeing methods, and energy-efficient production can help Pakistani suppliers stand out.

4. Leverage Logistics & Proximity
   Pakistan must market its faster turnaround times and shorter supply chains compared to India, especially for buyers seeking quick replenishment.

5. Collaborate Regionally
   Forming alliances with UAE-based garment makers can allow Pakistani exporters to become part of the value chain inside the UAE, rather than just shipping goods from Karachi.

Building Resilience in Pakistan’s Textile Trade

The India–UAE CEPA is a wake-up call. While it gives India an edge, it also highlights the need for Pakistan to strengthen its own trade diplomacy and bilateral agreements. For instance, Pakistan has yet to pursue a comprehensive trade pact with the UAE that could level the playing field.

In the meantime, Pakistani exporters like HiTextile must focus on competitive niches, stronger marketing, and relationship building with UAE buyers to ensure resilience.

Conclusion
The UAE–India trade agreement signals a new phase of regional competition, and Pakistan’s textile exporters cannot afford to stay passive. While Indian suppliers may benefit from tariff cuts and preferential access, Pakistan still has strengths in yarn quality, proximity, and niche fabrics. By focusing on value-added products, sustainability, and direct UAE partnerships, Pakistan can not only retain but expand its share in the Gulf’s textile supply chain.

HiTextile remains committed to helping buyers in the UAE and beyond access high-quality yarns and fabrics from Pakistan. [Request a Catalog] today to explore our range and secure a reliable supply partner.