OPINION: ‘Export Emergency’

When a country’s largest export sector begins to openly warn of collapse, policymakers can no longer afford denial or delay. The Pakistan Textile Council’s (PTC’s) call for an “Export Emergency” is not a lobbying slogan—it is a red alert for an economy already struggling to stay afloat. The call is for real as its effects are being felt on ground in terms of declining exports, worker layoffs and textile units’ closures.

Pakistan’s textile sector, the backbone of the country’s exports and industrial employment, has reached a critical breaking point. The PTC, in a candid letter to Prime Minister Shehbaz Sharif, has urged the government to declare an “Export Emergency” to arrest the rapid erosion in competitiveness that now threatens exports, jobs, and macroeconomic stability.

The warning could not be timelier—or more alarming. Pakistan’s exports declined by over 14 percent year-on-year in November 2025, thus marking the fourth consecutive month of contraction. During the first five months of FY26, exports fell to $12.8bn from $13.7bn last year, while imports surged past the $28bn mark. The resulting trade deficit—nearly $15.5bn in just five months—underscores a dangerous imbalance. November alone recorded a deficit of $2.86bn, 33 percent higher than a year ago.

Behind these numbers lies a deeper structural malaise. Pakistan is not losing exports due to lack of capacity or demand; it is because of the fact that its cost structure has become globally uncompetitive. Energy pricing disparities, inconsistent taxation, delayed refunds, and unpredictable policy signals have combined to squeeze margins to unsustainable levels. Competing textile exporters in Bangladesh, Vietnam, India, and even Sri Lanka operate with lower energy tariffs, stable tax regimes, and targeted export support. Pakistan’s exporters, by contrast, face rising electricity and gas prices, fragmented tax treatment across value chains, and working capital trapped in refund backlogs.

The tragedy is that textiles remain Pakistan’s most potent economic lever. The sector contributes over 60 percent of total exports and employs millions directly and indirectly. Every percentage point decline in textile exports has a multiplier effect—shrinking foreign exchange earnings, weakening the rupee, raising inflationary pressures, and widening fiscal stress. In this context, the export slowdown is not a sectoral issue; it is a national economic risk.

The call for an “Export Emergency” should therefore be read as a demand for coordinated, time-bound action rather than another committee or consultation. First, energy pricing for exporters must be regionally competitive and predictable. Temporary subsidies are not enough; Pakistan needs a transparent, export-linked tariff framework insulated from short-term fiscal firefighting. Second, taxation distortions — particularly across the textile value chain—must be eliminated. Zero-rating should mean zero-rating in practice, not refunds delayed for months. Third, liquidity must be restored by clearing refund backlogs and ensuring automatic, technology-driven reimbursement mechanisms.

Equally important is policy credibility. Exporters invest in long cycles — machinery, skills, market access — and cannot operate under constant regulatory uncertainty. Frequent changes in duties, tariffs, and incentives erode confidence and push buyers toward more reliable suppliers. Once lost, export markets are painfully slow to recover.

Pakistan’s recent economic stabilisation efforts, largely shaped by IMF conditionalities, have prioritised demand compression and fiscal tightening. While necessary for short-term balance-of-payments management, stabilisation without growth—especially export-led growth — is a dead end.

An economy of over 240 million people cannot stabilise itself into prosperity. Exports are not a luxury; they are the only sustainable exit from recurring crises.

(The writer is a former President, Overseas Investors Chamber of Commerce and Industry and a noted analyst on current affairs)

Copyright Business Recorder, 2026