Pakistan Falls Short of US$ 17 Billion Textile Export Target
Pakistan’s textile exports for the fiscal year 2023-24 grew by a modest 0.93%, generating US$ 16.7 billion in revenue. In the first five months of FY25, exports reached US$ 7.60 billion, marking a 10.51% increase compared to the same period last year.
However, the total exports for the first 11 months of 2024 amounted to US$ 15.43 billion, with projections indicating that December figures will bring the annual total to around US$ 17 billion, falling short of expectations.
The decline in performance is attributed to persistent political instability, which has resulted in the loss of approximately 40% of export orders. International buyers, concerned about the unstable environment, have shifted orders to competitors like Vietnam.
Pakistan’s inability to capitalize on redirected orders from Bangladesh, which faced disruptions in its textile industry, further compounded the challenges. Price disparities and limited product diversification made it difficult for Pakistan to compete effectively in the global market.
Diversification remains a critical issue for Pakistan’s textile sector, which has struggled to meet the demands of international buyers, particularly in Europe and the United States. Despite individual efforts, the industry has been unable to innovate and develop the new products necessary for sustained growth.
Tax policy changes have added to the sector’s difficulties. The Federal Board of Revenue (FBR) increased the advance tax rate for textile millers from 1% to 2% and mandated more detailed business reporting. These measures have prompted many textile companies to relocate operations to Dubai, with around 400 firms registering with the Dubai Chamber of Commerce. This shift is expected to lead to under-invoicing, further reducing export revenues.
Additionally, high energy costs and an impending cotton shortage have severely impacted the sector. Nearly half of Pakistan’s spinning units have shut down due to liquidity challenges and delays in the release of sales tax refunds. This situation is likely to cause a rise in yarn prices and shortages in 2025.
Geopolitical uncertainties, including the ongoing Russia-Ukraine war and tensions in the Middle East, have added further strain to the textile sector. Domestically, the lack of a clear textile policy and inadequate stakeholder collaboration have left the industry without a strategic direction.
With these challenges persisting, Pakistan’s textile exports are unlikely to meet the US$ 25 billion target. The sector, which plays a pivotal role in the country’s export revenue, urgently requires reforms and coordinated efforts to stabilize and improve its outlook.
