KARACHI — Pakistan’s textile industry, the backbone of the country’s exports, has raised fresh alarms over an accelerating crisis marked by shrinking shipments, surging costs, and the closure of major production units.
According to the Pakistan Bureau of Statistics (PBS), overall exports in September dropped 11.7% year-on-year to $2.51 billion the fifth decline in six months. The first quarter of FY26 closed with a 3.8% fall, with proceeds slipping to $7.61 billion from $7.91 billion in the same period last year. At the same time, the trade deficit widened sharply to $9.37 billion, driven by a 13.5% surge in imports.
Industry leaders say the situation is dire. Pakistan Textile Council (PTC) Chairman Fawad Anwar, former Karachi Chamber of Commerce and Industry (KCCI) president Javed Bilwani, and veteran industrialist Zubair Motiwala have all warned that without urgent reforms, Pakistan risks losing its competitive edge to regional rivals such as Bangladesh, India, and Vietnam.
Cost pressures and closures
A string of factory shutdowns underscores the depth of the crisis. Gul Ahmed Textile Mills Limited, one of the country’s largest players, recently shut down its export apparel division, citing relentless financial losses due to high input costs, policy uncertainty, and regional competition. The apparel division, known for being labor-intensive, employed thousands — making the closure a particularly stark signal of the pressure facing the sector.
“This is not an isolated case,” Bilwani told The Express Tribune. “Dozens of textile units across Pakistan are operating at a loss, and many are on the verge of closure.” He accused the government of ignoring key stakeholders in policymaking, despite the fact that Karachi alone contributes 54% of Pakistan’s exports and 66% of its tax revenue.
The industry also points to severe infrastructure bottlenecks, recurring water shortages, deteriorating law and order, and some of the world’s highest electricity tariffs higher, in fact, than in the United States and Europe, where most Pakistani exports are destined. “If production costs here are higher than in the markets we sell to, how can exports possibly remain viable?” Bilwani asked.
The end of facilitation schemes
Another sore point for exporters is the abrupt termination of the Export Facilitation Scheme (EFS), which many argue was the lifeline of Pakistan’s export competitiveness.
Motiwala warned that the collapse in shipments is directly tied to the withdrawal of the scheme. “If there were loopholes, they should have been fixed not abolished,” he said. “Restoring EFS is the only real solution.”
The Pakistan Textile Council has echoed these concerns, calling on the government to urgently address four key areas:
- Ensure regionally competitive and predictable energy tariffs for export industries.
- Reform the tax regime, including automated refunds within 72 hours and reinstating zero-rating on inputs.
- Expand financing tools by strengthening EXIM Bank and extending Export Finance and Long-Term Financing Facilities (LTFF).
- Establish policy stability, with transparent monitoring and monthly KPIs.
A broader corporate exodus
The crisis in textiles comes amid a wider trend of foreign firms scaling back operations in Pakistan. Multinationals including Procter & Gamble, Shell, TotalEnergies, Pfizer, Sanofi, Microsoft, and Careem have either exited or downsized, citing an unpredictable business environment and rising operational costs.
“A risk Pakistan cannot afford”
“If urgent corrective measures are not implemented, Pakistan faces not only the loss of export-oriented industries but also a flight of foreign investment,” warned PTC Chairman Anwar. “The consequences would be devastating: factory shutdowns, massive job losses, and a sharp drop in foreign exchange earnings at a time when the country is already under severe financial strain.”
