Pakistan’s textile exporters have come out strongly against the State Bank of Pakistan’s latest decision to raise the policy rate by 50 basis points, bringing it to 12%. Industry leaders warn that the move will drive up borrowing costs and significantly weaken the sector’s ability to compete in global markets at a time when manufacturers are already grappling with multiple cost pressures.
The Pakistan Textile Exporters Association (PTEA) has been vocal in expressing its concern, stating that the SBP rate hike will compound existing challenges including high energy tariffs, rising raw material prices, and surging international shipping costs.
PTEA Leadership Raises Alarm Over Competitiveness
PTEA Chairman Rehan Naseem Bharara highlighted that increased interest rates would raise working capital costs for textile businesses, discourage fresh investment in the sector, and make it considerably harder for Pakistani manufacturers to hold their ground against exporters from India, Vietnam, and China.
Bharara pointed out that businesses operating in competing markets benefit from far more affordable financing. General business lending rates in China, for instance, average around 3.04%, while industrial and small and medium enterprise loans in India and Vietnam are also available at comparatively lower rates across several financing categories. This gap in the cost of capital, he argued, places Pakistani exporters at a structural disadvantage in international trade.
Rising Costs Threatening Day-to-Day Operations
PTEA Vice Chairman Haris Yousaf added a ground-level perspective, noting that exporters were already finding it difficult to finance daily operations and procure raw materials. He warned that the combination of rising borrowing costs following the SBP rate hike and a reported nearly 200% surge in shipping expenses could seriously undermine export growth and broader economic activity within the textile industry.
Industry Calls for Export-Focused Policy Reforms
In response to these mounting pressures, the Pakistan Textile Exporters Association has called on the government to take targeted action. The association urged authorities to introduce a policy framework specifically oriented toward supporting export competitiveness, improve access to financing for small and medium-sized enterprises, and work toward reducing production costs across the entire textile value chain.
The concerns raised reflect a broader anxiety within Pakistan’s textile industry about the direction of monetary policy at a time when the sector is under pressure from multiple fronts. With global competition intensifying and domestic costs continuing to rise, exporters argue that the latest SBP rate hike moves in the opposite direction of what the industry needs to sustain and grow its international market share.
