In Pakistan, the textile industry, which plays a crucial role in the country's economy, is facing serious difficulties. Rising production costs, a decline in export volumes, and disruptions in supply chains, exacerbated by a nationwide strike of transporters, are putting significant pressure on this sector.
According to the Pakistan Textile Exporters Association (PTEA), the sector, which traditionally provides a substantial portion of export revenues and employment, has shown a decline in export volumes for the fourth consecutive month. This is raising growing concerns among market participants about the future of the industry.
PTEA notes that exports in the 2021 financial year amounted to $19.3 billion; however, in the following years, this figure dropped to $18 billion and then to $17 billion. From July to November 2025, exports fell by 6.39%, decreasing from $13.721 billion to $12.844 billion, indicating ongoing pressure on external supplies.
Despite having manufacturing resources and stable demand for textiles in some foreign markets, such as North America, Pakistani manufacturers are facing rising energy costs, high tax burdens, and increased financing costs. These factors negatively impact the competitiveness of Pakistani textiles compared to goods from Bangladesh, India, China, and Vietnam.
The situation in the cotton sector is also worsening the situation. Cotton production is declining due to agronomic and climatic issues, leading to the closure of several spinning and cotton ginning factories. Experts estimate that cotton production has fallen from 15 million to 5.5 million bales, which in turn affects the entire processing chain.
Changes in export regulations are also drawing attention, including adjustments to the Export Facilitation Scheme (EFS) and increased taxes on raw materials. These measures, according to the business community, negatively affect the liquidity of companies and their cost structure. Additionally, issues related to the influx of imported yarn and price competition in the domestic market remain relevant.
Energy tariffs remain a significant pressure factor on the sector. It is expected that in the coming years, the cost of electricity for industry will rise to 12 cents per kWh, which is significantly higher than in some neighboring countries. Power outages also threaten the stability of production processes.
On international markets, Pakistani manufacturers face various tariff and non-tariff barriers. In particular, exports to the USA are subject to higher duties compared to competitors in the region. Nevertheless, the export geography remains quite narrow: the European Union continues to be the largest market, while supply volumes to the USA have remained virtually unchanged for several years.
The nationwide strike of transporters has further exacerbated the situation, halting logistics operations and delaying export shipments. Experts estimate that daily losses could reach tens of millions of dollars, and logistics disruptions affect a wide range of export-oriented companies.
Market participants acknowledge that the further sustainability of the textile sector depends on a set of measures aimed at reducing costs, supporting raw material production, stabilizing logistics, and ensuring predictability in economic policy. In the context of ongoing uncertainty, the industry is forced to adapt to new internal and external challenges.
Source: https://www.dailymirror.lk/international/Pakistans-textile-industry-reels-under-rising-costs-and-supply-chain-disruptions/107-328825
