Pakistan’s textile industry may be showing early signs of stabilisation after several years of pressure, but the latest improvement in exports and manufacturing activity does not yet amount to a full recovery. The sector continues to face structural constraints involving energy costs, cotton availability, financing, productivity and international competitiveness.
Still, recent indicators suggest that the industry may be moving away from prolonged contraction. Some value-added segments, particularly apparel and knitwear, are showing stronger momentum than the wider textile chain.
Pakistan’s textile exports edged up to $17.93 billion in FY26 from $17.89 billion in FY25, according to the Pakistan Bureau of Statistics. The 0.26% increase was modest, but maintaining export value amid persistent cost and production pressures points to a degree of resilience. Readymade garment exports performed better, rising 3.87% to $4.29 billion, while cotton yarn exports climbed 12.4% to $765 million.
The trend became more encouraging during the opening two months of FY27. Textile and clothing exports increased 5.55% year on year to $3.38 billion during July-August, compared with $3.20 billion during the corresponding period a year earlier.
Readymade garments recorded particularly strong growth of 13.59% to $827 million. Knitwear exports rose 4.79% to $1.004 billion, towels increased 6.74% to $191 million and cotton yarn exports surged 34.8% to $161 million. Cotton cloth, however, fell 7.66%, while bedwear remained broadly stable.
Value-added segments provide momentum
The composition of export growth is significant. Rather than reflecting a uniform recovery across the textile industry, recent gains appear concentrated in products that generate greater value from raw materials.
Garments, knitwear, towels and home textiles involve additional stages of processing beyond fibre and yarn, creating greater export value and employment. The performance of these categories therefore offers a useful indication of where Pakistan’s textile competitiveness is currently strongest.
Manufacturing data provides another indication of uneven recovery. Large-scale manufacturing expanded 4.98% during FY26, according to provisional Pakistan Bureau of Statistics figures. Textile production as a broader category declined 0.63%, but wearing apparel increased 5.49%, while cotton yarn recorded modest growth of around 1%.
The July figures show an even sharper divergence. Overall large-scale manufacturing grew 3.03% year on year, while textile production slipped 0.03%. Wearing apparel, however, surged 22.03%.
This gap suggests that downstream manufacturing is currently performing better than some traditional textile operations.
Cotton remains a major vulnerability
The domestic cotton crop offers some encouragement but also underlines the challenges facing the Pakistan textile industry.
Cotton arrivals at ginning factories reached 2.389 million bales by September 15, up 19.17% from 2.004 million bales during the same period last year. Arrivals in Punjab increased 24.73%, while Sindh recorded a 16.25% rise. Industry representatives have indicated that production could exceed 6 million bales if favourable conditions persist.
However, the crop remains vulnerable to pests, weather conditions, acreage constraints and quality issues. Pakistan’s domestic cotton production has declined dramatically from historical levels, forcing mills to rely increasingly on imported fibre.
The weakness was also visible in June, when textile exports fell 16.71% year on year to $1.27 billion. Major value-added categories, including knitwear, readymade garments and bedwear, also experienced declines.
Consequently, short-term export growth should not be interpreted as evidence that the sector’s underlying challenges have been resolved.
Energy and competitiveness remain critical
Energy costs remain among the industry’s biggest constraints. Textile manufacturers continue to seek competitive electricity and gas prices, rationalised tariffs and greater policy predictability.
Higher energy costs affect more than export pricing. They also restrict manufacturers’ ability to invest in modern machinery, automation and energy-efficient technologies.
Pakistan’s ageing manufacturing infrastructure creates an additional competitive disadvantage. Competing primarily through lower labour costs is increasingly difficult as other textile-producing countries invest in automation, productivity improvements and more sophisticated manufacturing capabilities.
Diversification becomes increasingly important
Cotton dependency represents another structural weakness. Pakistan produced 14.81 million bales in FY12, but recent output has fallen to roughly 5.5 million bales. Greater reliance on imported cotton exposes manufacturers to international commodity prices, freight expenses and currency fluctuations.
The proposed Textile and Apparel Policy 2025-30 seeks to address several of these issues. Its target is to increase textile and apparel exports to $29.381 billion by FY30, with greater emphasis on value addition, productivity, investment, sustainability and market diversification.
For the Pakistan textile industry, diversification will be particularly important as global fibre consumption increasingly shifts towards man-made fibres. Expanding into MMF-based apparel, technical textiles and other higher-value products could help manufacturers access broader markets while reducing dependence on domestic cotton supplies.
The immediate export figures therefore offer grounds for cautious optimism, but the longer-term test will be whether Pakistan can convert this momentum into sustained productivity gains, stronger value addition and a more diversified industrial base.
