LAHORE (Express News): It seems like Pakistan’s so-called ‘vibrant’ textile sector is on its way towards a modest improvement in terms of earning export revenues for calendar year 2025; however, for 2026, a majority of textile pundits are sensing a declining trend due to tariff reshufflings and strategic shifts by global players, particularly the United States under Trump 2.0 and the People’s Republic of China, as both seek to protect their domestic industries.
According to official statistics, during the first eleven months of calendar year 2025, textile exports posted a growth of around 15.7%. The sector earned $17.85 billion during the period, compared to $15.43 billion in the corresponding period of the previous calendar year.
Year-end numbers indicate that 2025 offered some breathing space to Pakistan’s largest export-oriented sector, which contributes nearly 60% to total exports and employs millions directly and indirectly. Stronger global demand in the early part of the year, relative stability in domestic production, and improved order inflows from traditional markets helped textile exporters recover from the slowdown witnessed in previous years. However, industry stakeholders argue that the growth remained largely value-driven rather than volume-led, reflecting higher prices and cost pass-throughs instead of a fundamental structural turnaround.
Industry representatives point out that the absence of a comprehensive and inclusive textile policy was among the biggest missed opportunities of 2025. Patron-in-Chief of the Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA), Ijaz Khokhar, said the sector entered the year with expectations of policy clarity, but those expectations were not met. Despite repeated assurances, he said, the government failed to announce a textile policy capable of addressing long-standing structural issues, particularly those affecting small and medium enterprises.
Khokhar said drafting policy without taking major SME-based associations on board undermines the very purpose of industrial planning. He noted that associations representing nearly 90% of SMEs were ignored, while consultations largely remained confined to large textile groups. Under such circumstances, he added, the sector is not expecting any significant jump in exports during the ongoing fiscal year, as issues related to energy pricing, taxation, financing costs, and productivity remain unresolved.
Beyond domestic challenges, global developments have added new layers of uncertainty. Khokhar warned that the revival of protectionist trade policies under the Trump administration in the US has reshaped global textile trade flows. China, facing higher tariffs in the US market, has started diverting textile products to European markets as a precautionary measure. He noted that the European Union is one of Pakistan’s most important export destinations, where Pakistani exporters enjoy GSP Plus status, but the growing presence of Chinese textile goods in European warehouses is changing buyer preferences.
He cautioned that European buyers are increasingly opting for Chinese products, which in some segments offer comparable or even superior quality at lower prices. “Why would a buyer come to Pakistan and pay more when the same or better quality is readily available in Europe?” he asked, adding that this trend has already started hurting Pakistani exports and is likely to intensify in the coming years.
Another notable development in 2025 was the entry of Chinese textile groups into Pakistan under CPEC 2. Mian Waqas Hanif, a mid-scale textile exporter familiar with these investments, said Chinese companies are attracted by Pakistan’s relatively lower tariffs compared to China and India, and a few groups have already set up units with the aim of exporting finished goods to the US market. He warned this could emerge as a serious competitive challenge for local mills, many of which lack a complete textile supply chain and depend heavily on imported raw materials.
He added that Chinese firms possess deep expertise and integrated supply chains, enabling them to source raw materials from China and operate more efficiently in Pakistan. However, he stressed that such investments should be encouraged only if they help bridge gaps in Pakistan’s textile value chain. Allowing Chinese companies to produce intermediate products locally, which Pakistani firms currently import, could reduce production costs, improve competitiveness, and conserve foreign exchange, he said.
An industrialist from Sialkot, speaking on condition of anonymity, said the year was marked by political instability, higher taxes, and rising energy prices, all of which significantly raised the cost of doing business. He added that exporters were simultaneously dealing with the aftershocks of global tariff wars, resulting in shrinking space in both the American and European markets.
According to him, the survival of Pakistan’s textile sector now hinges on aggressive market diversification. He said Africa and Central Asian states offer untapped potential, but Pakistan has failed to position itself effectively in these regions. He criticised the Trade Development Authority of Pakistan (TDAP) for its weak role in identifying and developing new markets and urged it to become more proactive. He also stressed the need for product diversification, noting that while Pakistan’s bed linen enjoys a strong global reputation, most other textile categories lag behind in innovation and branding.
Nearly all stakeholders in the textile sector fear that without policy support, rationalisation of energy costs, and strategic market diversification, the industry may struggle to even match export revenues in 2026. They warned that the sector is now fighting on multiple fronts for survival and that the government should impose an emergency-like response to avert any decline in export earnings, cautioning that failure to act could seriously undermine the sector’s contribution to employment, foreign exchange inflows, and overall economic stability at a time when Pakistan can least afford another external shock.
