Pakistan’s textile industry struggles amid economic crisis

“When you lose your job, your life comes to a close,” the 43-year-old from Lahore told AFP, adding, “We’ve been working in factories for years… the day you get sacked, the story ends there.”

“When you lose your job, your life comes to a close,” the 43-year-old from Lahore told AFP, adding, “We’ve been working in factories for years… the day you get sacked, the story ends there.”

Amidst the global economic slowdown triggered by the war in Ukraine and the increase in energy expenses, Pakistan’s industrial manufacturing sector has also been adversely affected, mirroring the situation in other parts of the world. The textile industry, which constitutes a significant portion of Pakistan’s exports (60 percent), faces additional challenges due to the country’s struggling economy and prolonged periods of political instability. These factors have compounded the difficulties faced by the textile sector in Pakistan.

Amidst the global economic slowdown triggered by the war in Ukraine and the increase in energy expenses, Pakistan’s industrial manufacturing sector has also been adversely affected, mirroring the situation in other parts of the world. The textile industry, which constitutes a significant portion of Pakistan’s exports (60 percent), faces additional challenges due to the country’s struggling economy and prolonged periods of political instability. These factors have compounded the difficulties faced by the textile sector in Pakistan.

During the later stages of the COVID-19 pandemic, Pakistan’s industrial sector experienced a boost as it was granted more freedom from restrictions earlier than its regional competitors, India and Bangladesh.

During the later stages of the COVID-19 pandemic, Pakistan’s industrial sector experienced a boost as it was granted more freedom from restrictions earlier than its regional competitors, India and Bangladesh.

Additionally, the industry received government support in the form of financial aid and reduced energy costs. Despite these favourable conditions, in the period of 2022-2023, Pakistan witnessed a decline in its textile exports by 15 per cent, resulting in a total value of $16.5 billion.

Additionally, the industry received government support in the form of financial aid and reduced energy costs. Despite these favourable conditions, in the period of 2022-2023, Pakistan witnessed a decline in its textile exports by 15 per cent, resulting in a total value of $16.5 billion.

“Two years ago, we were on a very high growth trajectory… we were confident that our exports this year would go to $25 billion,” said Hamid Zaman, managing director of Sarena Textile Industries.

“Two years ago, we were on a very high growth trajectory… we were confident that our exports this year would go to $25 billion,” said Hamid Zaman, managing director of Sarena Textile Industries.

“Unfortunately, when you have political instability and things are not clear, and the policies of the government are reversed, this whole thing has gone into a tailspin,” he told AFP.

“Unfortunately, when you have political instability and things are not clear, and the policies of the government are reversed, this whole thing has gone into a tailspin,” he told AFP.

In April of the previous year, Pakistan plunged into political turmoil when Imran Khan was removed from his position as prime minister through a vote of no-confidence. Following his dismissal, Imran Khan attempted to mobilize public support for an early election, but this move led to his arrest in May. The situation escalated into violence, which eventually subsided after a severe crackdown on his party and its supporters, AFP reported.

In April of the previous year, Pakistan plunged into political turmoil when Imran Khan was removed from his position as prime minister through a vote of no-confidence. Following his dismissal, Imran Khan attempted to mobilize public support for an early election, but this move led to his arrest in May. The situation escalated into violence, which eventually subsided after a severe crackdown on his party and its supporters, AFP reported.

He was convicted of graft on Saturday and sentenced to three years in jail.

He was convicted of graft on Saturday and sentenced to three years in jail.

The textile and clothing sector employs around 40 percent of the country’s 20 million-strong industrial workforce.

The textile and clothing sector employs around 40 percent of the country’s 20 million-strong industrial workforce.

The main export markets are the US, EU, the UK, Turkey, and the UAE, supplying cotton fabrics, knitwear, bed linen, towels, and ready-made garments to global brands such as Zara, H&M, Adidas, John Lewis, Target and Macy’s.

The main export markets are the US, EU, the UK, Turkey, and the UAE, supplying cotton fabrics, knitwear, bed linen, towels, and ready-made garments to global brands such as Zara, H&M, Adidas, John Lewis, Target and Macy’s.

But many factories have closed in recent months — at least temporarily — or are no longer running at full capacity.

But many factories have closed in recent months — at least temporarily — or are no longer running at full capacity.

“Perhaps 25 to 30 percent of all textile factories have closed. It is estimated that perhaps 700,000 jobs have been lost in the last year or year and a half,” said Zaman.

“Perhaps 25 to 30 percent of all textile factories have closed. It is estimated that perhaps 700,000 jobs have been lost in the last year or year and a half,” said Zaman.

Babar felt this keenly, having looked for work at other factories — but they were also laying off employees.

Babar felt this keenly, having looked for work at other factories — but they were also laying off employees.

“They said they were no longer receiving orders from abroad,” she said.

“They said they were no longer receiving orders from abroad,” she said.

After devastating floods in the summer of 2022, cotton production in Pakistan fell to an all-time low.

After devastating floods in the summer of 2022, cotton production in Pakistan fell to an all-time low.

Due to the government’s decision to preserve foreign exchange reserves, the textile industry in Pakistan faced challenges in sourcing materials from abroad as imports were frozen. This resulted in thousands of containers, containing crucial raw materials and machinery for the country’s industries, being held up for months at the southern port of Karachi.

Due to the government’s decision to preserve foreign exchange reserves, the textile industry in Pakistan faced challenges in sourcing materials from abroad as imports were frozen. This resulted in thousands of containers, containing crucial raw materials and machinery for the country’s industries, being held up for months at the southern port of Karachi.

Moreover, textile companies had to grapple with a substantial increase in the cost of capital, with interest rates exceeding 20 percent. The central bank took these measures to address the issue of record-breaking inflation in the country. These combined factors added further strain to the already struggling textile sector in Pakistan.

Moreover, textile companies had to grapple with a substantial increase in the cost of capital, with interest rates exceeding 20 percent. The central bank took these measures to address the issue of record-breaking inflation in the country. These combined factors added further strain to the already struggling textile sector in Pakistan.

Pakistan finally managed to consolidate its foreign exchange reserves with the approval in mid-July of a $3 billion loan from the International Monetary Fund (IMF) and additional assistance from China, Saudi Arabia and the United Arab Emirates.

Pakistan finally managed to consolidate its foreign exchange reserves with the approval in mid-July of a $3 billion loan from the International Monetary Fund (IMF) and additional assistance from China, Saudi Arabia and the United Arab Emirates.

“But that’s not a solution, it’s just getting deeper and deeper into debt,” said Kamran Arshad, managing director of Ghazi Fabrics International.

“But that’s not a solution, it’s just getting deeper and deeper into debt,” said Kamran Arshad, managing director of Ghazi Fabrics International.

“The only way forward is enhancing Pakistan’s exports and creating an environment that is investor-friendly that would incentivise industrial production and activity,” he added.

“The only way forward is enhancing Pakistan’s exports and creating an environment that is investor-friendly that would incentivise industrial production and activity,” he added.

As part of the IMF bailout agreement, one of the stipulations was the discontinuation of energy subsidies, resulting in a significant increase in electricity costs. This surge in energy expenses has had an adverse impact on the competitiveness of textile companies in Pakistan.

As part of the IMF bailout agreement, one of the stipulations was the discontinuation of energy subsidies, resulting in a significant increase in electricity costs. This surge in energy expenses has had an adverse impact on the competitiveness of textile companies in Pakistan.

“Our biggest challenge going forward is having energy prices that are substantially higher than those of India, Bangladesh, Sri Lanka, Vietnam and China,” said Arshad, “We’re not asking for subsidies. Realistically we are asking for regionally competitive energy prices.”

“Our biggest challenge going forward is having energy prices that are substantially higher than those of India, Bangladesh, Sri Lanka, Vietnam and China,” said Arshad, “We’re not asking for subsidies. Realistically we are asking for regionally competitive energy prices.”

In the face of these challenges, the country’s textile manufacturers have lost customers globally.

In the face of these challenges, the country’s textile manufacturers have lost customers globally.

“Pakistan’s overall market share in the textile and garment industry was nearly 2.25 percent about two years ago. Now it’s down to around 1.7 percent,” said Aamir Fayyaz Sheikh, CEO of Kohinoor Mills.

“Pakistan’s overall market share in the textile and garment industry was nearly 2.25 percent about two years ago. Now it’s down to around 1.7 percent,” said Aamir Fayyaz Sheikh, CEO of Kohinoor Mills.

Sheikh remains optimistic about the prospects if the political situation stabilizes after the upcoming election scheduled before the year’s end.

Sheikh remains optimistic about the prospects if the political situation stabilizes after the upcoming election scheduled before the year’s end.

“After the elections there will be more political clarity and that will help bring more economic stability,” he said.

“After the elections there will be more political clarity and that will help bring more economic stability,” he said.

But for ordinary workers like Babar, there is little light at the end of the tunnel.

But for ordinary workers like Babar, there is little light at the end of the tunnel.

“Life is getting harder every day,” said the mother of three.

“Life is getting harder every day,” said the mother of three.

“We cook once and make it last for two days. And if we don’t have any food, we make do, without complaining.”

“We cook once and make it last for two days. And if we don’t have any food, we make do, without complaining.”