Textile Exporters Warn of Sharp Drop From October to December

Pakistan’s textile exporters have warned the federal government that the country could face a sharp decline in goods exports during the October-to-December quarter of the current fiscal year. The warning comes as manufacturers report pressure from weak demand in Western markets, higher freight charges and rising production costs that are squeezing margins across the export chain.

Pakistan Textile Exporters Association Patron-in-Chief Khurram Mukhtar said the sector was facing pressure from several directions at the same time. According to him, inflation in key overseas markets has reduced buyer demand, while sea freight costs have increased significantly, weakening exporters’ ability to compete internationally.

The textile industry remains one of Pakistan’s most important sources of foreign exchange, making any slowdown a serious concern for the wider economy. Exporters say the pressure is not limited to finished goods but is spreading across the value chain, including ginning, spinning, weaving, processing and knitting.

Mukhtar warned that the fall in export trade volume was severe and said only financially stronger exporters may be able to withstand the current conditions. He also cautioned that once Pakistan loses market share in international markets, recovering those buyers could become difficult and costly.

The association has urged the government to provide temporary support through the Duty Drawback of Local Taxes and Levies scheme at a rate of 6 percent to 8 percent. Exporters are also asking authorities to clear outstanding refunds quickly, saying delayed payments are worsening the liquidity crunch faced by textile businesses.

The industry has also raised concerns over industrial energy costs and financing access. Mukhtar said cross-subsidies included in industrial energy tariffs should be removed to reduce production costs, while anomalies in the Export Finance Scheme should be addressed to ensure support reaches eligible exporters.

According to the exporters’ representative, the government had announced a fixed financing rate of 4.5 percent under the Export Finance Scheme, but banks were still charging higher rates in some cases. He also questioned financing allocations to sectors and products that, according to him, should not receive preference over value-added textile exporters.

The textile sector is calling for a targeted financing package to modernise important parts of the supply chain, including ginning, sizing, weaving and processing. The proposal focuses on balancing, modernisation and replacement of machinery, along with steps to improve productivity, automation and sustainable production practices.

The next major test for policymakers will be whether they can respond before the expected export slowdown becomes visible in quarterly trade numbers. Exporters argue that timely intervention would be cheaper than trying to regain lost market share later, especially at a time when Pakistan needs stable foreign exchange earnings and stronger industrial competitiveness.