ISLAMABAD, JAN 6: Pakistan’s value-added textile industry, a cornerstone of the national economy and one of the largest sources of employment and foreign exchange, is facing mounting pressure as manufacturers warn that competitiveness is slipping at a dangerous pace. Industry leaders say a combination of soaring energy costs, delayed refunds and unpredictable policy shifts is undermining exporters’ ability to compete globally, triggering factory slowdowns, workforce reductions and the gradual loss of international buyers.
Manufacturers across the value-added textile chain report that rising production costs are no longer an abstract concern but a daily operational challenge. Energy tariffs, in particular, have become a decisive factor, with sharp and unpredictable fluctuations making it difficult for exporters to plan production cycles or quote reliable prices to overseas clients.
Exporters say international buyers operate on tight margins and place a premium on cost certainty and delivery reliability. Even minor pricing disadvantages, they warn, can lead to lost orders in highly competitive markets. As a result, factories with confirmed orders and installed capacity are struggling to maintain viability, despite continued global demand.
Reflecting these broader concerns, the Pakistan Hosiery Manufacturers Association (PHMA) has warned that the textile export engine is nearing a critical tipping point and requires immediate, coordinated intervention. PHMA Zonal Chairman Abdul Hameed said the challenges confronting exporters are being felt directly on factory floors, with many units operating under severe financial strain.
He noted that hosiery exporters, despite having capacity and orders in hand, are being squeezed by soaring energy costs, delayed tax refunds and frequent policy changes. According to him, Pakistan is being priced out of global markets where buyers demand both competitive rates and consistent delivery schedules. If the current trajectory continues, he cautioned, the country risks surrendering hard-earned market share to regional rivals with more predictable cost structures.
Former PHMA Chairman Shehzad Azam Khan described the decline in textile exports as a warning sign for the wider economy rather than a sector-specific grievance. He said value-added textiles are among the few industries capable of generating large-scale employment and foreign exchange simultaneously, making them critical to economic stability.
Any sustained contraction in exports, he argued, directly affects foreign exchange reserves, exchange rate stability and inflation, with consequences that extend well beyond the textile sector. He criticised what he described as a reliance on short-term fixes and ad hoc measures, saying these have failed to address the underlying issue of competitiveness.
According to Shehzad Azam Khan, exporters cannot plan long-term investments, upgrade technology or retain international buyers in an environment marked by uncertainty. While competing countries have aligned their industrial, energy and trade policies around export growth, Pakistan continues to treat exporters as a convenient revenue buffer during periods of fiscal stress.
Industry representatives say frequent changes in duties, the withdrawal of incentives and delays in tax adjustments have eroded confidence among international brands. Many global buyers, they note, now prioritise policy stability as much as pricing, preferring sourcing destinations where frameworks remain consistent for years rather than changing within months.
Shehzad Azam Khan warned that Pakistan’s stop-start policy approach has weakened its credibility at a time when buyers are seeking long-term partnerships. He said that uncertainty not only discourages new orders but also makes existing buyers hesitant to commit to future seasons.
Former PHMA Zonal Chairman Naseer Butt highlighted the liquidity crisis gripping the hosiery segment, particularly small and medium-sized manufacturers. He said blocked refunds and rising financing costs have severely restricted working capital, forcing many units to operate below capacity or temporarily shut down.
Such disruptions, he warned, have a cascading impact across the textile value chain, affecting yarn suppliers, processors, transporters and thousands of workers whose livelihoods depend on steady production. He stressed that the export slowdown is not driven by weak demand, noting that global buyers continue to seek diversified sourcing options.
According to Naseer Butt, Pakistan is losing out because its cost structure has become increasingly unpredictable. Sharp swings in energy tariffs, combined with uneven tax treatment across the value chain, make it difficult for exporters to quote competitive prices or commit to long-term contracts.
They have called for regionally competitive and predictable energy pricing, streamlined and automated refund mechanisms, and a stable policy framework that allows manufacturers to plan investments with confidence. Without such reforms, exporters caution, Pakistan risks falling further behind at a time when global opportunities remain available but increasingly contested.
