World Losing Interest in Pakistan Textile Exports

Pakistan's textile exporters have cautioned of a sharp decline in exports from October to December due to fragile demand in Western markets, rising freight charges and higher production costs.

Key points

• Mukhtar remarked the government's unveiled 4.5 percent financing rate under the Export Finance Scheme for fiscal year 2027 had yet to be implemented.
• Pakistan Textile Exporters Association Patron-in-Chief Khurram Mukhtar remarked the industry was facing mounting pressure that threatened its competitiveness and market share.
• He pressed the administration to introduce temporary backing through the Duty Drawback of Local Taxes and Levies scheme at a rate of 6 to 8 percent.
• 200 billion in export financing to yarn exporters despite yarn being on the scheme's negative list.
• 300 billion allocation for small and medium enterprises, he questioned whether it could be fully applied.

Pakistan Textile Exporters Association Patron-in-Chief Khurram Mukhtar remarked the industry was facing mounting pressure that threatened its competitiveness and market share. While sea freight charges have risen by 1.5 to 2.5 times, squeezing exporters' already narrow profit margins, inflation in Western markets has weakened international demand.

Mukhtar remarked falling export volumes were affecting the entire textile supply chain, from cotton ginning and spinning to weaving, processing and knitting. High inflation and subdued domestic demand have went on to the pressure, leaving a number of industry segments under severe financial strain. Textile Industry Asks Maryam Nawaz to Cancel New Import Tax.

He pressed the administration to introduce temporary backing through the Duty Drawback of Local Taxes and Levies scheme at a rate of 6 to 8 percent. He additionally called on the immediate clearance of outstanding refunds and the removal of cross subsidies in industrial energy tariffs to reduce production costs.

Mukhtar remarked the government's unveiled 4.5 percent financing rate under the Export Finance Scheme for fiscal year 2027 had yet to be implemented. Banks were charging exporters at least 5.5 percent, with some rates reaching 8.5 percent, he remarked.

He additionally questioned the allocation of around Rs. 200 billion in export financing to yarn exporters despite yarn being on the scheme's negative list. While some eligible textile exporters were unable to secure allocations despite exceeding the State Bank of Pakistan's required export performance threshold, he criticized financing for sugar exporters. Pakistan Faces $2 Billion Cotton Shortage.

Although Mukhtar welcomed an extra Rs. 300 billion allocation for small and medium enterprises, he questioned whether it could be fully applied. He remarked the allocation would require Rs. 600 billion in export performance and observed that the previous year's Rs. 100 billion allocation for SMEs had gone unused.

To strengthen the textile supply chain, Mukhtar proposed a Rs. 140 billion financing package for modernizing four segments: Rs. 20 billion each for ginning and sizing, and Rs. 50 billion each for weaving and processing. Meanwhile, the funding would backing machinery upgrades, automation, productivity and more sustainable production.

He called on the federal administration and the State Bank to develop the proposed financing program with industry representatives. He additionally called on the administration to introduce a 10 year strategic plan for textile exports, warning that delayed action could produce it much harder to recover lost international markets. Stay Connected with ProPakistani.

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Taken together, the developments around world Losing Interest in Pakistan Textile Exports point to a situation that is still moving, and the coming days should bring more clarity.