Egypt is one of the largest textile and apparel centers in the Middle East. The industry manufactures a variety of fabrics, garments, and knitted garments, bed linen and terry cloth products. Approximately 5,00,000 workers are employed in textiles and apparel -- a quarter of the total employment in manufacturing.

Taking labor costs into consideration, Egypt's textile and apparel products are not competitive when compared with China, Indonesia, Pakistan, Sri Lanka and Vietnam. Restrictions on imports have been sustained and some products have even been barred altogether. Aside from a few exceptions, imports of cotton fabrics and readymade textile products are prohibited.

Currently, there is a 150 per cent tariff on imports from the European Union. Although there are no quantitative restrictions on cotton yarn, the imported product is subject to a flat 30 per cent tariff, plus 10 per cent sales tax and a three per cent surcharge. The tariff charged on imported raw materials used in goods for exports is refunded to the importer through the drawback system.

High subsidies have led to wasteful use of extra long staple cotton. Egypt produces a variety of extra long, and medium-long staple cotton. While long staple production began to fall during the mid ’70s, the production of medium-long varieties increased.