Archive · 2 Jan 2026
Pakistan's Textile Industry Faces Deep Crisis
Pakistan's textile industry, which used to be very important for the country's economy, is in big trouble.
Many factories have closed because it's too expensive to make textiles there.
The cost of energy and taxes are very high, and other countries like Bangladesh and India can make textiles cheaper.
Also, Pakistan is producing much less cotton, which is a big problem because it's a main material for textiles.
Farmers are struggling because the price of cotton has gone down, and they are switching to growing sugarcane instead.
All these problems are making it hard for Pakistan to sell textiles to other countries, and the situation is getting worse.
Textile mills in India are also facing issues with the end of duty-free cotton imports, which could increase their costs and affect their ability to compete in the market.
Farmers and traders, however, believe this could help support domestic cotton prices.
Pakistan's textile exports have declined for the fourth consecutive month, dropping 6.39% from July to November 2025.
Over 100 spinning mills and 400 ginning factories have shut down due to high production costs and declining cotton production.
Cotton production has fallen from 15 million bales to 5.5 million bales, with prices crashing to Rs 8,000 per 40 kg.
High energy costs, taxes, and financing costs have made Pakistani textiles uncompetitive in global markets compared to regional competitors.
Policy missteps, including recent amendments to the Export Facilitation Scheme, have further strained the industry.
- Who
- Pakistan's textile industry, including exporters, farmers, and factory owners
- What
- A deep crisis due to high production costs, declining exports, and factory shutdowns
- When
- The crisis has been ongoing, with recent declines in exports and factory shutdowns
- Where
- Pakistan, with impacts on global textile markets
- Why
- Due to high energy costs, taxes, financing costs, and policy missteps, along with a collapse in cotton production
Textile Mills
Farmers and Traders
Duty-Free Cotton Imports
Textile Mills
Textile mills are concerned about the lack of extension for duty-free cotton imports, which ended on December 31, 2025, as it will increase their production costs and affect their competitiveness.
Farmers and Traders
Farmers and traders believe the discontinuation of duty exemption will support domestic prices, which are currently below the minimum support price levels, benefiting them.
- Current Textile Exports
- $12.844 billion (July-Nov 2025)
- FY2021 Export Benchmark
- $19.3 billion
- Cotton Production Decline
- From 15 million bales to 5.5 million bales
- Spinning Mills Shut Down
- More than 100
- Ginning Factories Shut Down
- 400
- Cotton Price
- Rs 8,000 per 40 kg
- Combined Sales Tax on Cotton
- 86%
- Electricity Tariff Projection (FY26)
- 12 cents per kWh
- Cotton Arrivals Shortage
- 60 lakh bales (170 kg each) lower than last year
- Current Season Production
- Below 300 lakh bales
- Minimum Support Price (MSP) Difference
- Over ₹10,000 per candy (356 kg)
- Cotton Corporation of India Purchases
- 64-65 lakh bales
- Closing Stock for Current Season
- Around 90 lakh bales
- Brazilian Cotton Price
- ₹50,000 per candy (356 kg) port delivery