Pakistan’s textile exporters have warned of a sharp decline in exports from October to December due to weak demand in Western markets, rising freight charges and higher production costs.
Pakistan Textile Exporters Association Patron-in-Chief Khurram Mukhtar said the industry was facing mounting pressure that threatened its competitiveness and market share. Inflation in Western markets has weakened international demand, while sea freight charges have risen by 1.5 to 2.5 times, squeezing exporters’ already narrow profit margins.
Mukhtar said falling export volumes were affecting the entire textile supply chain, from cotton ginning and spinning to weaving, processing and knitting. High inflation and weak domestic demand have added to the pressure, leaving several industry segments under severe financial strain.
He urged the government to introduce temporary support through the Duty Drawback of Local Taxes and Levies scheme at a rate of 6 to 8 percent. He also called for the immediate clearance of outstanding refunds and the removal of cross subsidies in industrial energy tariffs to reduce production costs.
Mukhtar said the government’s announced 4.5 percent financing rate under the Export Finance Scheme for fiscal year 2027 had yet to be implemented. Banks were charging exporters at least 5.5 percent, with some rates reaching 8.5 percent, he said.
He also questioned the allocation of around Rs. 200 billion in export financing to yarn exporters despite yarn being on the scheme’s negative list. He criticized financing for sugar exporters, while some eligible textile exporters were unable to secure allocations despite exceeding the State Bank of Pakistan’s required export performance threshold.
Although Mukhtar welcomed an additional Rs. 300 billion allocation for small and medium enterprises, he questioned whether it could be fully used. He said the allocation would require Rs. 600 billion in export performance and noted that the previous year’s Rs. 100 billion allocation for SMEs had gone unused.
To strengthen the textile supply chain, Mukhtar proposed a Rs. 140 billion financing package for modernizing four segments: Rs. 20 billion each for ginning and sizing, and Rs. 50 billion each for weaving and processing. The funding would support machinery upgrades, automation, productivity and more sustainable production.
He called on the federal government and the State Bank to develop the proposed financing program with industry representatives. He also urged the government to introduce a 10 year strategic plan for textile exports, warning that delayed action could make it much harder to recover lost international markets.
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