Pakistan’s textile exports grew by about 15.7% year-on-year to $17.85 billion during the first eleven months of calendar year 2025, compared with $15.43 billion in the same period last year, providing limited relief to the country’s largest export sector while concerns mount over prospects for 2026.
Official data shows the sector, which accounts for nearly 60% of total exports and employs millions directly and indirectly, benefited from relatively stronger global demand earlier in the year and steadier domestic production.Â
Industry participants, however, said the increase was largely value-driven rather than volume-led, reflecting higher prices and cost pass-throughs rather than a structural turnaround.
Stakeholders said the absence of a comprehensive textile policy remained a major gap in 2025, particularly for small and medium enterprises that form the bulk of the industry. They said consultations were largely limited to large groups, leaving unresolved issues such as energy pricing, taxation, financing costs and productivity, which continue to constrain export growth.
Global developments have added to uncertainty. Exporters warned that renewed protectionist trade measures in the United States are reshaping global textile flows, prompting Chinese producers to divert shipments to European markets. This has intensified competition in the European Union, one of Pakistan’s key export destinations under the GSP Plus scheme, with buyers increasingly opting for lower-priced Chinese products.
Another development during the year was the entry of Chinese textile groups into Pakistan under the second phase of CPEC. Industry participants said some of these firms are setting up units to export finished goods, creating competitive pressure for local mills that lack integrated supply chains and depend on imported raw materials. They added that such investments could be beneficial if they help develop missing links in Pakistan’s textile value chain, particularly intermediate products.
Exporters also pointed to domestic challenges, including higher taxes, rising energy prices and political uncertainty, which have increased the cost of doing business. They said shrinking space in traditional markets has made diversification essential, identifying Africa and Central Asia as underexplored regions.
The industry criticised the limited role of the Trade Development Authority of Pakistan in developing new markets and called for greater focus on product diversification beyond bed linen, where Pakistan has a strong global presence.
With tariff realignments, intensifying competition and unresolved policy issues, industry participants warned that without targeted support, cost rationalisation and market diversification, the textile sector may struggle to maintain export momentum in 2026.
