Pakistan’s textile exporters have warned of a steep export decline in October–December as weaker Western demand and rising costs squeeze businesses. They urged government intervention to protect overseas market share during the second quarter of FY2026–27.
In Sunday’s statement, Pakistan Textile Exporters Association (PTEA) Patron-in-Chief Khurram Mukhtar said mounting pressures threatened exporters’ competitiveness.
Weaker demand squeezes textile manufacturers
Mukhtar said Western inflation had weakened orders, while sea freight charges had increased by 1.5 to 2.5 times. Higher input and logistics costs were further eroding margins.
“The decline in export trade volume is unprecedented,” he said, warning that only financially strong exporters would survive. Regaining lost markets would prove extremely difficult, he added.
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Weak domestic demand amid inflation had compounded difficulties across ginning, spinning, weaving, processing and knitting.
The warning follows modest growth last fiscal year. Pakistan’s textile exports reached $17.932 billion in FY2025–26, rising just 0.26%, according to PBS figures reported by APP.
Mukhtar sought temporary support of 6–8% through the Duty Drawback of Local Taxes and Levies scheme to retain international customers. He also demanded immediate clearance of outstanding refunds and removal of cross-subsidies from industrial energy tariffs.
Export financing draws scrutiny
Mukhtar said the government had yet to implement the 4.5% fixed Export Finance Scheme (EFS) rate announced in the FY27 Finance Bill. Instead, banks charged exporters between 5.5% and 8.5%, he claimed.
He alleged that yarn exporters received around Rs200 billion through EFS despite yarn appearing on its negative list. He also questioned financing for sugar exporters, describing sugar as a highly regulated sector.
Meanwhile, eligible textile exporters struggled to secure allocations despite strong performance, he said. Some achieved export performance of five to six times their financing, against the mandatory two-times threshold.
Such allocations discouraged value addition and penalised major foreign-exchange earners, Mukhtar argued.
Although he welcomed increased SME financing, he questioned whether businesses could absorb an additional Rs300 billion. This required Rs600 billion in export performance, which he said did not currently exist.
The previous fiscal year’s Rs100 billion SME allocation had expired unused, he added. He sought proportionate financing for the top 100 exporters, saying they contributed up to 60% of total export volume.
Rs140 billion upgrade package proposed
Mukhtar proposed Rs140 billion for textile modernisation: Rs20 billion each for ginning and sizing, and Rs50 billion each for weaving and processing.
Tailored short- and long-term facilities should fund machinery balancing, modernisation and replacement, alongside productivity improvements, automation and sustainable production.
He urged the federal government and State Bank to design the programme jointly with industry representatives.
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Mukhtar also sought a 10-year textile export strategy built around existing industrial expertise, exportable surplus and structural reforms to improve competitiveness.
“Historically, we have been reactive. The current situation demands a proactive approach,” he said.
He warned that timely intervention would cost considerably less than recovering lost export markets.
