Pakistan’s textile exporters have warned that exports could decline sharply from October to December as weak demand in Western markets, rising shipping costs and higher production expenses put pressure on the industry.
Khurram Mukhtar, patron-in-chief of the Pakistan Textile Exporters Association, said the industry was struggling to remain competitive as inflation in Western economies weakened demand and sea freight charges increased by 1.5 to 2.5 times. The higher costs are further reducing exporters’ already limited profit margins.
He said the slowdown was affecting the entire textile supply chain, including cotton ginning, spinning, weaving, processing and knitting. High domestic inflation and weak local demand have added to the difficulties, putting several segments of the industry under financial pressure.
Mukhtar called on the government to provide temporary relief through the Duty Drawback of Local Taxes and Levies scheme at a rate of 6 to 8 percent. He also urged authorities to clear pending refunds and eliminate cross subsidies in industrial electricity tariffs to bring down production costs.
He said the government’s announced financing rate of 4.5 percent under the Export Finance Scheme for fiscal year 2027 had not been implemented. According to Mukhtar, banks were charging exporters at least 5.5 percent, with some rates reaching 8.5 percent.
He also raised concerns over the allocation of around Rs. 200 billion in export financing to yarn exporters, even though yarn is included on the scheme’s negative list. He criticized financing for sugar exporters and said some eligible textile exporters had been unable to secure funding despite exceeding the State Bank of Pakistan’s required export performance threshold.
Mukhtar welcomed an additional Rs. 300 billion allocation for small and medium enterprises (SMEs) but questioned whether exporters could fully utilize the funds. He said the allocation would require Rs. 600 billion in export performance, while the previous year’s Rs. 100 billion SME allocation had remained unused.
To improve the textile industry’s production capacity, he proposed a Rs. 140 billion financing package to modernize four segments of the supply chain. The plan includes Rs. 20 billion each for ginning and sizing, and Rs. 50 billion each for weaving and processing.
The proposed funding would help businesses upgrade machinery, introduce automation, improve productivity and adopt more sustainable production methods.
Mukhtar urged the federal government and the State Bank to develop the financing programme in consultation with industry representatives. He also called for a 10-year strategic plan for textile exports, warning that delays could make it increasingly difficult for Pakistan to regain lost international markets.
