Pakistan’s textile industry, a cornerstone of the national economy, is teetering on the edge of collapse. Over the past five years, the sector has been battered by a multitude of challenges, leading to a significant downturn in production and a corresponding decline in exports. This trend, if not urgently addressed, threatens to undermine the country’s economic stability and exacerbate the already precarious unemployment situation.
At the heart of the crisis is the alarming decrease in local cotton production, forcing the industry to rely heavily on costly imports. The surge in import expenditure has placed an enormous financial burden on textile manufacturers, already grappling with skyrocketing production costs. These costs have been further inflated by the unprecedented depreciation of the Pakistani rupee against the US dollar, making raw material and machinery imports even more expensive. Consequently, the industry’s competitiveness in the global market has been severely compromised, with Pakistan’s textile products struggling to find buyers amidst cheaper alternatives from countries like Bangladesh, India and Vietnam.
The situation is aggravated by the lack of governmental support that is crucial for the survival of the textile sector. In competing nations, governments have extended substantial incentives and subsidies to their export industries, enabling them to maintain a competitive edge in the international market. In contrast, Pakistani textile manufacturers have been left to fend for themselves in an increasingly hostile economic environment. The impact of this neglect is evident in the widespread closure of textile mills across the country, particularly in Faisalabad, the hub of Pakistan’s textile industry. Reports indicate that over 100 small and large factories have shut down, rendering more than 200,000 workers jobless. If this trend continues, the country could witness further mill closures, with production levels plummeting to a mere 40% of their potential output.
The Pakistan Hosiery Manufacturers and Exporters Association (PHMEA) has sounded the alarm, warning that the entire industry could collapse if the government fails to intervene. The Association has specifically called for a reduction in energy prices and interest rates, which currently stand at prohibitively high levels. Electricity and gas prices, in particular, have been a significant factor in driving up production costs, making it nearly impossible for textile manufacturers to remain profitable. Furthermore, the high-interest rates, currently above 10%, have made it difficult for businesses to secure the financing needed to sustain operations and invest in modernizing their production facilities.
The dire state of the textile industry is a matter of grave concern not only for the millions of workers directly employed by the sector but also for the broader economy. The textile industry is a major contributor to Pakistan’s exports, accounting for a significant portion of the country’s foreign exchange earnings. Any further decline in this sector will have a ripple effect across the economy, exacerbating the trade deficit and putting additional pressure on the already fragile Pakistani rupee.
In light of these challenges, it is imperative that the government takes immediate and decisive action to rescue the textile industry. The first step must be to reduce energy costs and bring down interest rates to a level that allows businesses to operate sustainably. Additionally, the government must consider offering targeted subsidies and incentives to textile manufacturers, similar to those provided by competing nations. This could include tax breaks, reduced import duties on raw materials and financial assistance for the adoption of energy-efficient technologies.
Moreover, there is an urgent need to address the underlying issues that have led to the decline in local cotton production. This requires a comprehensive strategy to revitalize the agricultural sector, with a particular focus on supporting cotton farmers through improved access to credit, modern farming techniques and high-quality seeds. By boosting local cotton production, Pakistan can reduce its reliance on expensive imports and enhance the competitiveness of its textile industry.
The current global economic environment presents an opportunity for Pakistan to expand its textile exports, particularly as demand for apparel and home textiles continues to rise. However, capitalizing on this opportunity requires a concerted effort from all stakeholders, including the government, industry leaders and financial institutions. Failure to act now will result in the irreversible decline of a sector that has long been the backbone of Pakistan’s economy. The challenges are immense, but they are not insurmountable. With the right policies and support, Pakistan can not only salvage its textile sector but also position it as a key driver of economic growth and job creation.
—The writer is contributing columnist, based in Turbat, Balochistan.
