The Pakistan Textile Council (PTC) has called on Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb to implement immediate policy reforms to prevent the collapse of the textile industry.
In a letter addressed to the minister, PTC Chairman Fawad Anwar warned that the sector, which accounts for nearly 60% of Pakistan’s export earnings and employs over 15 million people, is under severe financial strain.
The council highlighted surging energy costs as a critical challenge, with industrial electricity tariffs now at 16-18 cents per kWh—nearly double the rates in countries like Vietnam, Bangladesh, India, and China. Gas prices for captive power plants have risen to $13-14 per MMBtu, compared to $5-8 in regional economies. The situation is further aggravated by additional capacity charges and surcharges, driving up production costs and eroding competitiveness in global markets.
Working capital rates have also spiked from 2% to approximately 14%, while tax policies introduced under the International Monetary Fund (IMF) program, such as minimum turnover and super taxes, have pushed effective tax rates to over 50%. These financial pressures have severely impacted the low-margin, high-volume textile industry, making reinvestments almost impossible due to escalating short-term interest rates.
PTC expressed concerns over the long-term consequences of the crisis, pointing out that similar conditions in countries like Argentina and Greece in the past led to economic recessions, social unrest, and permanent losses of industrial capacity. The council warned that if the financial challenges persist, many textile mills could shut down, resulting in mass unemployment, civil instability, and significant economic disruption.
The letter also noted that some textile manufacturers have already begun shifting operations abroad due to rising costs in Pakistan. This trend threatens to undermine the country’s status as a key player in global textile manufacturing.
The council urged the government to adopt a balanced approach to reforms, ensuring that macroeconomic goals do not jeopardize the industry’s viability. It emphasized the need for sustainable energy pricing, reduced capacity charges through renegotiations with power producers, and competitive gas rates for industrial use. Additionally, PTC called for a fair taxation framework to retain the industry’s profitability and maintain critical foreign exchange inflows.
PTC Chairman Fawad Anwar stressed the urgency of a calibrated policy response to safeguard the textile sector, stating, “The industry is at a critical juncture. Immediate and well-considered measures are required to prevent irreversible damage while ensuring Pakistan’s economic stability.”
The textile sector, which has been a cornerstone of Pakistan’s economy, is now at risk of losing its competitive edge without swift and decisive action from the government.
