Textile Council urges PM to address structural issues as exports stagnate

The Pakistan Textile Council (PTC) has urged Prime Minister Shehbaz Sharif to take immediate policy action to address structural challenges that it says are preventing Pakistan’s textile and apparel sector from returning to a growth path.

In a letter to the prime minister, the council said textile and apparel exports remained virtually stagnant during fiscal year 2025-26, rising only 0.26% to $17.93 billion from $17.88 billion a year earlier.

The industry body also highlighted a sharp decline in exports during June 2026, which fell 16.71% year-on-year and 23% month-on-month, warning that the trend reflects worsening competitiveness in Pakistan’s largest export industry.

According to the PTC, the sector continues to face three major structural challenges: high production costs, delays in implementing the expanded Export Refinance Scheme, and a deepening domestic cotton shortage.

The council said rising labour costs, higher mandatory employer contributions and distortions in industrial electricity tariffs have significantly increased production costs, reducing the competitiveness of Pakistani exporters.

It welcomed the government’s announcement in the federal budget for FY2026-27 to expand the Export Refinance Scheme but expressed concern that the initiative has yet to become operational, forcing exporters to rely on commercial borrowing for working capital.

PTC also warned that Pakistan’s cotton production has declined to around 5.5 million bales, down from a peak of 14.8 million bales in 2011-12, creating a widening gap between domestic supply and industrial demand. It attributed the decline to climate-related challenges, water shortages and weakening farmer confidence.

To revive exports, the council recommended reducing employers’ Employees’ Old-Age Benefits Institution (EOBI) contributions to 2% without affecting employee benefits, directing NEPRA to align industrial electricity tariffs with the actual cost of service on a revenue-neutral basis, immediately operationalising the expanded Export Refinance Scheme, and adopting a comprehensive national strategy to revive cotton production.

The proposed cotton strategy includes introducing a credible support price mechanism, accelerating the rollout of heat-tolerant seed varieties, protecting cotton-growing areas and improving production forecasting.

PTC Chairman Fawad Anwar said the textile industry was not seeking protection but a level playing field through competitive energy pricing, timely implementation of financing measures and a sustainable supply of cotton.

He said addressing these structural issues was essential to restore export growth, improve industrial competitiveness and maximise Pakistan’s export potential.

The council expressed confidence that timely implementation of the proposed measures would help revive the country’s largest export sector, boost foreign exchange earnings and support sustainable economic growth.