Pakistan’s textile industry, which accounts for nearly 63% of the country’s total exports, continues to be the backbone of the economy. According to the Pakistan Textile Council (PTC), textile exports reached USD 3.21 billion in the first two months of the 2025–26 fiscal year (July–August), marking a 10% increase year-on-year.
Growth With Short-Term Challenges
While the sector shows resilience in the long term, monthly fluctuations underline its vulnerability. Pakistan’s overall exports for July–August stood at USD 5.1 billion, reflecting only a 0.65% annual increase. In August 2025, exports fell by 12.5% compared to last year and by 10% compared to July, signaling the sector’s exposure to short-term market shifts.
Shift Toward Value-Added Products
The report highlights strong growth in value-added segments, including knitwear, woven apparel, and home textiles, each recording double-digit increases. Meanwhile, traditional categories such as raw cotton and yarn experienced a decline, showing a structural shift in the industry towards higher value products.
Key Export Destinations
The European Union remains Pakistan’s largest market, accounting for USD 1.3 billion in sales. Exports to the United States remained steady at USD 878 million, while the United Kingdom rose to USD 309 million. Neighboring markets also gained importance, with Bangladesh importing USD 121 million and the UAE USD 101 million. This distribution underscores the EU’s critical role, while also highlighting the risks of over-dependence on a single market.
- Path Toward Competitiveness
- To sustain growth, the PTC recommends:
- Aligning energy prices with regional competitors
- Simplifying tax structures and ensuring faster refunds for exporters
- Keeping labor costs competitive with Bangladesh and other rivals
- Investing in green energy and innovative product development
- Enacting a five-year long-term export policy under legal guarantees
Outlook
Pakistan’s textile industry holds significant potential, particularly in value-added exports, which have become the key growth driver. However, structural reforms in energy, labor, and policy frameworks are essential if Pakistan is to secure its place in global markets, especially in the European Union, while reducing risks tied to traditional categories and market dependencies.
