Pakistan’s textile exporters have urged the government to introduce immediate financial and policy measures, warning that weaker overseas demand, soaring freight charges and higher manufacturing costs could trigger a sharp contraction in goods exports during October–December.
Khurram Mukhtar, Patron-in-Chief of the Pakistan Textile Exporters Association (PTEA), said the industry was facing mounting pressures that threatened its competitiveness and international market share. Inflation in Western economies has weakened buyer demand, while sea freight rates have climbed to between 1.5 and 2.5 times their previous levels, further squeezing exporters’ margins.
“The decline in export trade volume is unprecedented,” Mr Mukhtar said, warning that financially stronger businesses would be better positioned to withstand the downturn, while recovering lost markets could prove difficult.
The pressure extends across Pakistan’s textile value chain, from cotton ginning and spinning to weaving, processing and knitting. High domestic inflation has also weakened local demand, adding to financial strains across the industry.
PTEA calls for immediate policy intervention
To protect Pakistan textile exports, Mukhtar proposed temporary support through the Duty Drawback of Local Taxes and Levies scheme, with rebates of 6%–8%. He also called for the prompt payment of outstanding government refunds and the removal of cross-subsidies embedded in industrial energy tariffs to lower operating costs.
He raised concerns over the implementation of the Export Finance Scheme (EFS). Although the FY27 Finance Bill announced a fixed financing rate of 4.5%, exporters were reportedly paying at least 5.5%, with some facing rates as high as 8.5%.
Mukhtar also questioned the allocation of approximately Rs200 billion in EFS financing to yarn exporters, despite yarn being included on the scheme’s negative list. He similarly challenged financing for sugar exporters, citing the sector’s highly regulated status.
Meanwhile, textile exporters that substantially exceed the State Bank of Pakistan’s prescribed export-performance threshold are reportedly struggling to secure adequate financing. Some businesses achieve five to six times the required performance against a minimum threshold of twice the prescribed level, he said.
Mukhtar argued that the allocation system risks disadvantaging value-added manufacturers and businesses that generate significant foreign exchange earnings.
Financing and modernisation proposals
While welcoming additional EFS funding for small and medium enterprises (SMEs), Mukhtar questioned whether the proposed increase could be fully utilised. He said the additional Rs300 billion allocation would require Rs600 billion in export performance, while the previous year’s Rs100 billion SME allocation had reportedly remained unused.
He urged the government to distribute financing more closely in line with each segment’s contribution to exports, noting that the country’s top 100 exporters account for as much as 60% of total export volume.
To improve productivity and strengthen the supply chain, PTEA proposed a dedicated Rs140 billion modernisation package. The plan includes Rs20 billion each for ginning and sizing, alongside Rs50 billion each for weaving and processing.
The proposed facilities would support machinery replacement, technological upgrades, automation and more sustainable production. Mukhtar called on the federal government and the State Bank to develop the programme jointly in consultation with industry representatives.
He also advocated a 10-year strategy for Pakistan textile exports, built around existing industrial capabilities, exportable surplus and structural reforms to improve international competitiveness.
“Historically, we have been reactive. The current situation demands a proactive approach,” he said, adding that timely support would cost considerably less than rebuilding export markets after they had been lost.
