KARACHI: Pakistan’s textile exports fell for the third consecutive month, according to official data reviewed by Arab News on Wednesday, raising concerns for an economy heavily dependent on the sector for foreign exchange earnings at a time when the government is pushing economic diplomacy to stabilize its finances.
The textile industry, the backbone of Pakistan’s export economy, is struggling to regain momentum as Prime Minister Shehbaz Sharif’s government works to rebrand the debt-ridden economy through diplomacy, reforms and investment outreach.
Pakistan Bureau of Statistics (PBS) figures show textile exports dropped 0.6 percent to $1.62 billion in October, 2 percent to $1.57 billion in September, and 7.3 percent to $1.52 billion in August of fiscal year 2025-26. July was the only month to record a jump, with textile shipments rising 32 percent to $1.68 billion from $1.52 billion in June.
“Textile exports are falling due to high energy costs and flooding,” Ahsan Mehanti, chief executive officer at Karachi-based Arif Habib Commodities Limited, told Arab News. “Overall exports will be weak till energy efficiency and agriculture output is low.”
PBS data for July–October FY26 shows Pakistan’s total exports dropped 4 percent to $10.4 billion, while imports surged over 15 percent to $23 billion, a trend that risks adding pressure to the country’s balance-of-payments position ahead of June.
The prolonged decline in exports has raised red flags among policymakers and industry stakeholders who view textile stagnation as a significant threat to Pakistan’s already fragile external account.
Kamran Arshad, chairman of the All Pakistan Textile Mills Association (APTMA), Pakistan’s largest and most influential textile industry body, told Arab News Pakistan’s textile millers were currently paying an energy tariff of 34.5 per kilowatt-hour, citing “high” energy rates, a “higher” interest rate, “highest” taxation compared to regional competitors and a “much more expensive” gas as the main reasons shipments remain depressed.
Comparative data also shows Pakistan facing significantly higher costs of doing business than regional peers, with power tariffs around 12 cents per kilowatt-hour versus 6–9 cents in India and 4–9 cents in China, steeper gas prices, higher interest rates and a weaker exchange rate, alongside a more complex and heavier corporate tax regime.
Pakistan Textile Exporters Association Patron-in-Chief Khurram Mukhtar was not immediately available for comment.
However, a former APTMA chairman also said Pakistani textile manufacturers were paying energy prices twice as high as competitors in China, India and other regional markets.
“Our textile exports are uncompetitive regionally as well as overconcentrated on the US market where the retail businesses are facing slowdown,” said the former chairman, who requested anonymity due to his current role as the head of a government institution. He also exports textiles to China.
Ahmad Jawad, chief organizer of the Pakistan Business Forum (PBF), said the slump was driven by both global and domestic pressures.
“International demand has remained soft as inflation and slower retail sales in key markets like the US and Europe continue to reduce buying orders,” he said.
At the same time, “our industry is struggling with high production costs, particularly uncompetitive electricity and gas tariffs when compared with regional competitors.”
Jawad said cost pressures, liquidity constraints from high interest rates and delays in refunds had limited many exporters’ ability to operate at full capacity.
APTMA chairman Arshad has repeatedly warned that the industry faces mounting pressure from high energy costs, abnormal taxation and an overall weak business environment.
“Export orders remain weak, mills are operating below capacity, and no new investment is being made due to policy uncertainty and excessive cost of borrowing,” Arshad said in a statement in September after the monetary policy announcement.
He said the central bank had “dismayed” textile manufacturers by keeping its policy rate unchanged at 11 percent despite easing inflation.
Jawad added that policy uncertainty and exchange rate volatility had also affected pricing and long-term contracts, making it difficult for exporters to plan with confidence.
“The impact on the broader economy is significant because textiles account for more than half of Pakistan’s total exports,” he added. “When this sector slows down, overall export earnings weaken, pressure on the current account rises, and foreign exchange inflows decline.”
Economists warn that the continued slump in exports may deepen Pakistan’s dependence on the International Monetary Fund unless structural issues are addressed.
PBF’s Jawad said Pakistan could reduce its reliance on IMF bailouts “only if it undertook consistent structural reforms, particularly those that make exports competitive, stabilize energy pricing, improve governance, and encourage investment in value-added sectors on competitive tax tariffs.”
“On 40 percent tax slap, nobody comes to you for investment. That needs to be rationalized,” he said.
Despite the ongoing challenges, analysts also say the sector has the potential to rebound quickly if the government ensures a stable and competitive operating environment.
“Regionally competitive energy tariffs, predictable policies, and improved liquidity support would help restore confidence and allow exporters to regain momentum with a combination of stronger rupee,” Jawad said.
