Hosiery, knitwear exports: Rising costs put foreign orders at risk
KARACHI: Pakistan’s hosiery and knitwear exporters are struggling to retain the foreign orders as soaring production and freight costs, expensive energy, liquidity shortages and intensifying regional competition squeeze their already narrow margins, prompting the industry to seek urgent government intervention.
Pakistan Hosiery Manufacturers & Exporters Association (PHMA) has warned that the mounting cost pressures are putting export competitiveness and international market share at risk, with buyers increasingly able to shift sourcing to rival destinations that are offering lower costs, reliable supplies and faster delivery.
Seeking an immediate response, PHMA Central Chairman Syed Zia Alamdar Hussain has called for an urgent meeting with the ministries of commerce and finance, the State Bank of Pakistan (SBP), Federal Board of Revenue (FBR) and other relevant authorities to work out measures to protect existing orders and help exporters withstand the growing pressure.
READ ALSO: PHMA urges govt to adopt export-friendly policies
In a letter to the Federal Commerce Secretary, he urged the Commerce Ministry to convene a consultative meeting bringing together PHMA representatives and officials from the Ministry of Finance, SBP, FBR and other relevant government departments to review the challenges confronting the hosiery and knitwear export sector and identify practical measures to safeguard export orders and competitiveness.
The central chairman PHMA said the apparel, hosiery and knitwear industry was facing historically high manufacturing costs, exorbitant freight charges, higher energy tariffs coupled with power outages, high taxation costs, liquidity constraints, intensified regional competition and weakening international demand. Together, these pressures are making it increasingly difficult for exporters to remain competitive, secure new orders and retain existing international buyers.
Rising production costs have emerged as a major constraint on the competitiveness of the knitwear sector. High electricity and gas tariffs, federal and provincial taxes and levies, embedded cross-subsidies in energy prices, increasing labour costs, delayed tax refunds and higher regulatory and compliance costs are collectively driving up manufacturing expenses. The sharp rise in ocean freight has added another burden, he added.
Freight rates to major destinations have, in some instances, increased by 1.5 to 2.5 times, significantly raising the landed cost of Pakistani products, Syed Zia Alamdar Hussain explained that exporters are consequently being forced to absorb the additional cost, further losing the already narrow margins, or pass it on to buyers, making their products less competitive against alternative sourcing destinations.
To help exporters absorb the exceptional increase in production, energy, freight and other business costs, PHMA has proposed temporary Drawback of Local Taxes and Levies (DLTL) support of 6–8 percent of FOB value on a shipment basis for a limited period. The association said the proposed support would help exporters retain existing international buyers and protect the country’s market share during the current challenging period.
The central chairman also highlighted the working-capital constraints facing the industry, saying hosiery and knitwear exporters require affordable financing to procure raw materials and meet production costs before export proceeds are realised. PHMA has urged the authorities to ensure uniform implementation of the announced 4.5 percent Export Financing Scheme (EFS) end-user rate, which is to remain applicable until June 2027.
The association pointed out that the benefit was not being uniformly reflected in financing provided by banks, with some exporters continuing to face higher financing costs. PHMA further drew attention to the growing competition from regional sourcing destinations. International buyers and sourcing organisations are increasingly assessing competing countries on the basis of cost, reliability, delivery timelines and the overall business environment.
Against this backdrop, Syed Zia Alamdar Hussain stressed that retaining existing international buyers and export markets had become as important as securing new business. Once a buyer shifts sourcing to another country, recovering that business can be extremely difficult, PHMA said, stressing that the government’s action on helping cut the costs faced by exporters was essential to protect existing orders and prevent further loss of the country’s international market share.
Copyright Business Recorder, 2026