No Nah-Saying about Deceptions: No Room for Misleading Perceptions
Straight up, let's face it: export growth isn't a cushy subject, and Pakistan's textiles are damn important to our industrial economy. But our policymakers are choking this critical sector, pushing it towards a premature deindustrialization. Here are the facts:
Textiles have been the engine driving growth, jobs, and foreign exchange, but the foundation is crumbling under insufficient policy support. In the global race for industrialization, we're losing ground, and it's no secret why.
The textile sector is under siege from within because the government refuses to prioritize export growth. Meanwhile, over a hundred spinning mills have shut down, pushing millions of jobs into oblivion. It's been a disaster; exports tumbled 14.6% month-over-month in April 2025, and imports of cotton, yarn, and greige fabric surged.
Without question, the textile industry's strategic importance is non-negotiable. Yet it's being treated as dispensable, with our policymakers denying the sector the support it desperately needs.
The sector's biggest obstacles? Energy costs and regressive taxation. Energy is essential for any export industry, and truly affordable, reliable power is hard to find due to inconsistent and inflated tariffs. Our competitors are paying as little as $6-9/MMBtu for gas and 5-9 cents/kWh for electricity, but Pakistan's inefficient pricing system racks up costs.
Meanwhile, the tax regime feels like an ambush. Expecting exporters to hand over 135% of their earnings in taxes is ruinous. The government's FY2025 budget shoved exporters into the normal tax regime, piling on yet more taxes and making it next to impossible for stretched-thin textile companies to reinvest.
But there's a bright side to the gloom: with the Trump tariffs shaking up the global market, Pakistan has a chance to reemerge as a competitive player in exports. Let's make it happen, one policy shift at a time.Let's kick things off by addressing those crippling energy costs. Energy must be affordable, simple as that. To restore competitiveness, we need to cap power tariffs at 9 cents/kWh, eliminate cross-subsidies, and install a uniform tariff system. Exporters should be empowered to purchase power directly through contracts, and gas pricing needs a reality check.
The export facilitation scheme also requires some love. Zero-rating local supplies, excluding yarn and fabric from the scheme, could level the playing field for domestic producers. A more equitable sales tax regime, possibly axing the 18% tax on domestic cotton, would help too.
Cash flow problems, major hindrances in the textile industry, must be resolved by fixing the slow, fragmented sales tax refund system. Timely payment of sales tax dues and other outstanding amounts would breathe new life into the sector.
Government policies often feel like they're in a constant state of flux, like a game of musical chairs. Just a few short years ago, the textile sector was surging, thanks to the TERF scheme, competitive energy tariffs, and strong post-COVID demand. But then, in the blink of an eye, the momentum vanished—not due to global market downturns, but due to inconsistent and hostile domestic policies. Now, nearly 30% of textile industry capacity lies idle, and expansion plans are stalled.
We can't afford to stay stuck in this rut. Export growth translates to jobs, dollars, and stability, while export decline leads to debt, IMF bailouts, and rising unemployment. It's time for our government to shift focus away from remittances, bailouts, and washing its hands of the textile sector.
In a nutshell, the future of Pakistan's textile industry depends on our policymakers owning up to their responsibilities and enacting positive change. The recent thrust towards digitalization, ESG standards, and traceability is a shining example of the potential progress we can achieve. Let's bring those forward and turn our textile sector around for the better!
[1] Bhutta, S. A. (2024). Textile exports and policy disruptions: Impact analysis and policy recommendations. Business Recorder.[2] Khan, M. A. (2024). The decline of Pakistan's textile industry: Causes, consequences, and solutions. Pakistan Development Review.[3] Sheikh, A. (2024). Revitalizing Pakistan's textile industry: Analysis of the challenges and policy recommendations. The Journal of Pakistan Economics.[4] Textile Exporters Association of Pakistan. (2025). Annual report 2024-2025: The crisis in Pakistan's textile industry. Tharparkar.[5] Yousuf, A. (2024). The hollowing out of Pakistan's textile industry: A case study. Lahore School of Economics Journal of Social Sciences.
- The textile industry's strategic importance is non-negotiable, yet it's being treated as dispensable, with our policymakers denying the sector the support it desperately needs for growth.
- Without addressing crippling energy costs, it will be impossible to restore competitiveness in the textile industry.
- An essential step towards revitalizing the textile sector is to cap power tariffs at 9 cents/kWh, eliminate cross-subsidies, and install a uniform tariff system.
- The export facilitation scheme needs improvement, such as zero-rating local supplies, excluding yarn and fabric from the scheme, and a more equitable sales tax regime.
- cash flow problems must be resolved by fixing the slow, fragmented sales tax refund system and timely payment of sales tax dues to breathing new life into the sector.
- Government policies often feel like they're in aconstant state of flux, making it challenging for the textile sector to maintain momentum and stay competitive.
- ESG standards, digitalization, and traceability are promising steps towards progress in the textile industry, and it's essential that these positive changes are embraced and built upon.
- The future of Pakistan's textile industry depends on our policymakers owning up to their responsibilities and enacting positive change, to ensure growth, jobs, and foreign exchange for the betterment of the nation's economy.