Signs of textile revival

For Pakistan’s textile industry, the word revival still needs to be used with caution. The sector is too important, too large and too deeply affected by structural weaknesses for a few months of improved figures to be treated as evidence of a complete turnaround.Yet, after several difficult years, there are sufficient signs to suggest that the industry may be moving from contraction towards stabilisation — and, in some segments, renewed growth.

The first sign comes from exports. Pakistan’s textile exports increased marginally to $17.93 billion in FY26 from $17.89bn in FY25, according to the Pakistan Bureau of Statistics. The increase was only 0.26 per cent, but the significance lies in the fact that exports held their ground despite pressures on production, energy costs, financing and competitiveness. More encouragingly, readymade garment exports rose 3.87pc to $4.29bn, while cotton yarn exports increased 12.4pc to $765 million.

The beginning of FY27 has been more promising. During July-August, textile and clothing exports rose 5.55pc to $3.38bn from $3.20bn a year earlier. Readymade garments increased 13.59pc to $827m, knitwear 4.79pc to $1.004bn, towels 6.74pc to $191m and cotton yarn 34.8pc to $161m. Cotton cloth, however, declined 7.66pc while bedwear remained almost unchanged.

The composition of this growth is more important than the headline number. Demand appears to favour some of Pakistan’s more value-added and competitive products rather than driving broad-based expansion across the entire textile chain.

Textile production itself declined marginally by 0.03pc, but wearing apparel expanded 22pc

Greater value comes from converting fibre and yarn into garments, knitwear, towels, home textiles and other finished products, generating more value and employment from the same raw material. The continuing strength of garments and knitwear therefore provides a more useful indication of resilience than the overall export figure alone.

Manufacturing data also signals stabilisation, as provisional Pakistan Bureau of Statistics figures showed large-scale manufacturing expanded 4.98pc overall in FY26. While the broader textile group declined 0.63pc, key sub-sectors registered growth, with wearing apparel rising 5.49pc and cotton yarn posting modest gains of around 1pc.

The latest monthly figures are revealing. In July 2026, overall large-scale manufacturing (LSM) increased 3.03pc year-on-year. Textile production itself declined marginally by 0.03pc, but wearing apparel expanded 22.03pc. The divergence suggests that while the traditional textile chain remains under pressure, downstream garment manufacturing is showing considerably greater momentum.

There are also signs of investment in machinery and technology, indicating that parts of the industry are attempting to improve productivity, modernise plants and strengthen export competitiveness. The cotton crop provides another, though provisional, reason for optimism. By September 15, cotton arrivals at ginning factories had reached 2.389m bales, 19.17pc higher than the 2.004m recorded during the same period last year. Punjab’s arrivals were up 24.73pc and Sindh’s 16.25pc. Industry representatives have suggested production could exceed 6m bales if favourable conditions continue.

But cotton also illustrates the limits of the optimism. Arrivals have begun to lose momentum, while pests, rainfall, acreage and crop quality remain big risks. Pakistan’s domestic cotton production has fallen sharply from its historical highs, leaving the textile industry increasingly dependent on imported fibre.

The export numbers illustrate the problem. Textile exports fell 16.71pc year-on-year in June to $1.27bn, with weakness visible in major value-added categories including knitwear, readymade garments and bedwear. Stable annual exports should consequently not be confused with a durable recovery.

The industry remains highly sensitive to international demand, energy prices, freight disruptions, exchange-rate movements and the availability and cost of working capital. An improvement in any one of these can lift exports temporarily; it cannot transform underlying competitiveness.

Energy remains one of the most persistent constraints. Textile manufacturers have repeatedly called for regionally competitive electricity and gas prices, tariff rationalisation and a predictable policy environment. Energy costs affect more than the immediate price of an exported product. Expensive electricity and gas reduce the ability and incentive to invest in modern machinery and energy-efficient production.

This makes Pakistan’s ageing industrial base a serious concern. The country cannot indefinitely compete by relying on relatively inexpensive labour while competitors invest in automation, product development and efficient manufacturing.

Cotton presents an even more fundamental problem. Pakistan produced a record 14.81m bales in FY12. Recent production has fallen to roughly 5.5m bales, leaving the industry increasingly dependent on imported fibre. This exposes mills to international prices, freight costs and exchange-rate movements. For an industry historically built around cotton, the decline has become an industrial competitiveness issue, not merely an agricultural one.

The government’s draft Textile and Apparel Policy 2025-30 recognises several of these weaknesses. It sets an ambitious target of raising textile and apparel exports to $29.381bn by FY30, with greater emphasis on value-added products, productivity, investment, sustainability and diversification.

Diversification is nevertheless becoming unavoidable. Global fibre consumption has shifted substantially towards man-made fibres, while Pakistan remains heavily dependent on cotton. Greater participation in man-made fibre apparel and technical textiles would open wider global markets and reduce excessive dependence on an increasingly unreliable domestic cotton crop.

The issue, therefore, is not whether Pakistan can produce another few hundred million dollars of textile exports. It is whether the country can build an industrial ecosystem capable of creating considerably greater value from the same resources.

Published in Dawn, The Business and Finance Weekly, September 28th, 2026