Pakistan's Textile Crisis: How Decades of Mismanagement Threaten Economic Collapse

The textile sector, once hailed as the backbone of Pakistan’s economy, accounting for nearly 60 per cent of total exports, has in recent years seen a significant decline with exports plummeting and imports rising, Maldives Insight reported.

Citing data from the Pakistan Textile Council (PTC), the report showed that "textile exports in Pakistan fell 3.83 per cent year-on-year in the first quarter of FY26 to $7.61 billion, down from $7.91 billion in the same period last year".

In September this year, the country experienced the fifth contraction in six months -- with exports plunging 11.71 per cent to $2.51 billion and imports rising 13.49 per cent to $16.97 billion.

While industry leaders have long warned against the situation, short-term fixes-rebates, bailouts, and energy subsidies by successive governments have just temporarily inflated export figures. The measures did nothing to build sustainable competitiveness.

“If urgent corrective measures are not taken, Pakistan risks further closures of export-oriented units and reduced foreign investment. This will not only mean job losses and industrial shutdowns, but also a sharp decline in Pakistan’s foreign exchange earnings at a time when the country cannot afford such shocks,” PTC Chairman Fawad Anwar was quoted as saying.

Meanwhile, the Federation of Pakistan Chambers of Commerce & Industry (FPCCI), in its latest policy brief, described an inefficient and costly logistics system that swallows 15.6 per cent of GDP -- almost double the cost in advanced economies.

"This means that before a single container of garments leaves the port, it is already burdened with costs that make Pakistani exports unviable," the report said.

With the country's logistical collapse, it has fallen completely off the World Bank’s Logistics Performance Index, while its regional peers like India, Vietnam, and Bangladesh are steadily climbing.

These countries with efficient ports, modern rail systems, and integrated supply chains have given exporters the edge to meet deadlines, cut costs, and expand market share, the report said.

It also cited the use of outdated technology, energy crises, and policy inconsistency with frequent changes in tax regimes, export facilitation programmes, and import restrictions.

While policymakers speak of “revival plans” and “energy relief packages”, the data, the shutdowns, and the layoffs all point to a "collapsing" industry, the report said.

- IANS