Challenges including high production costs, elevated interest rates, inadequate gas supply, and soaring electricity tariffs, have led to thePakistan’s textile exports stagnating at 1.6 per cent of global exports, amounting to a mere $16 billion. As per a report by APTMA, the country lags significantly behind the $40 billion worth of textile exports from Bangladeshdespite a $5 billion investment in modern machines as energy shortages continue to hinder growth.

ZahidMazhar, Chairman, APTMA—Southern Zone, notes, Pakistan’s textile exports declined from $19.33 billion in 2021-22 to $16.50 billion in 2022-23. To reach the ambitious target of $60 billion in exports by 2027, the country needs to increase its textile exports to $33 billion byintroducing supportive policies, he adds.

A few of the key challenges being faced by the textile industry in Pakistan include high energy costs, especially capacity payments to Independent Power Producers (IPPs), which inflate electricity tariffs. The government pays Rs. 35 per unit for electricity but charges Rs. 60 per unit.

There is a call to cancel unnecessary IPP contracts and conduct a forensic audit, as capacity payments have surged from Rs. 200 billion in 2015 to Rs. 2 trillion in 2024.

The textile industry also struggles with high gas and RLNG costs, leading to the closure of 30 per cent of mills. The government's plan to cut off gas supply to captive power plants by January 2025 is impractical, given the current electricity network's limitations.

Additionally, high interest rates of 19.50 per cent are stifling industrial activity, and the recent Federal Budget 2024-25 has imposed anti-industry measures, including increased taxes and withdrawal of zero-rating sales tax on local inputs for export manufacturing. These policies threaten to deindustrialise the economy and hinder export growth, particularly in the textile sector, which is vital for Pakistan's economic stability.