In 2024, Pakistan's textile industry, once a cornerstone of the national economy, stands at a critical crossroads. Once globally competitive, it now faces unprecedented challenges threatening its global standing.
In 2024, Pakistan's textile industry, once a cornerstone of the national economy, stands at a critical crossroads. Once globally competitive, it now faces unprecedented challenges threatening its global standing.
Meanwhile, neighbouring Bangladesh, a major competitor in the textile sector, is grappling with a severe crisis, prompting international buyers to seek alternative suppliers. This presents a potential opportunity for Pakistan, but its textile sector is struggling to seize it.
Despite access to inexpensive raw materials and a competent, low-cost labour force, high production costs have negatively impacted Pakistan’s textile industry. As factories close and thousands lose their jobs, the question looms: Can Pakistan turn this crisis into a new beginning for its textile sector?
The global textile market is expanding rapidly. In 2023, the market was valued at over $1.84 trillion, projected to grow to $3.70 trillion by 2033 at an annual rate of 7.0 per cent Pakistan ranked 9th among the largest textile exporters in 2022 but has since fallen from the top ten. Emerging competitors like Bangladesh, Vietnam, and Indonesia now hold 4th, 5th, and 9th positions, respectively. Bangladesh’s textile exports amounted to $34 billion last year, while Pakistan’s exports declined to $16.50 billion in 2023, with only a slight increase to $16.65 billion in 2024. Given current economic and political conditions, it seems unlikely that Pakistan will meet the government’s ambitious target of $25 billion by the end of the fiscal year.
Favourable government policies play a crucial role in promoting any industry. However, Pakistan’s Textile and Apparel Policy 2020-2025, aimed at transforming the textile sector, has fallen short of its objectives due to a lack of political will and implementation barriers. Ironically, the policy focuses heavily on increasing textile exports to $50 billion by 2025 without putting the necessary measures in place to achieve this goal. It overlooks the significant issues facing the industry, including energy costs, outdated machinery, and supply chain disruptions.
Bangladesh’s textile industry, known for its low-cost garment production, has been hit by political instability, energy shortages, rising labour costs, and environmental challenges, leading many factories to collapse. Global brands that once depended on Bangladesh are now searching for alternative suppliers.
Unfortunately, Pakistan is unable to fill this gap due to its own set of challenges. High energy costs, heavy taxation, outdated machinery, lack of technological investment, and supply chain disruptions have resulted in the closure of numerous textile units, causing mass layoffs and further economic strain in regions like Faisalabad and Karachi. In Faisalabad alone, once known as the 'Manchester of Pakistan', over 1,000 small and medium textile units have shut down over the past two years, leaving entire communities without jobs.
While Bangladesh struggles, countries like Vietnam and India have been quick to capitalize on this opportunity, ramping up production and investing in modern technology. Global conditions are generally favourable for exports, with American and European brands shifting away from China and Myanmar. However, Pakistan risks falling behind due to its inability to address internal challenges. Cotton production is already declining due to climate change, and environmental concerns over water usage and pollution from textile dyes complicate matters further, as global buyers increasingly demand sustainable practices from suppliers.
Yet, amid these challenges, opportunities remain. Key areas where Pakistan’s textile industry can potentially turn around include investment in technology and infrastructure, sustainability, workforce reintegration, and market expansion. The industry must modernize its manufacturing capacity by adopting advanced automation and digitalization technologies, which would reduce production costs, improve efficiency, and enhance product quality.
The government can play a vital role by offering incentives for upgrading machinery and facilitating access to capital for small and medium enterprises (SMEs). Unfortunately, the Import-Export Bank of Pakistan (EXIM Bank) has yet to become fully operational and has not provided adequate support to export-oriented industries.
To differentiate itself, Pakistan must adopt green production technologies, reduce chemical usage, improve waste management, reduce water consumption, and use organic materials. This shift toward sustainable production could attract brands seeking environmentally responsible suppliers. Diversifying products could also open new markets, especially in high-performance textiles for industries like automotive, transportation, and protective clothing. The rise of e-textiles or smart fabrics integrated with GPS and AI technology represents a cutting-edge opportunity. Pakistan can further explore fabrics with abrasion resistance and long-lasting colours, which are increasingly being used in military and law enforcement applications.
The displaced workforce presents both a challenge and an opportunity. By investing in vocational training and education programmes, Pakistan can upskill its textile workers, making them more adaptable to modern production methods. A skilled workforce will be crucial in attracting foreign investment and boosting exports. Furthermore, various trade agreements, if pursued effectively, can provide preferential access to key markets.
Expanding export markets beyond traditional regions will reduce reliance on a few large buyers and tap into emerging markets in Africa and Latin America. Resolving Pakistan's energy crisis is crucial. Stable and affordable energy could be a game-changer for the industry. The government's current efforts to reduce electricity costs offer a glimmer of hope.
Pakistan’s textile industry is at a pivotal moment. While Bangladesh’s crisis has created an opening, Pakistan’s internal struggles have hindered the sector’s ability to capitalize on it. However, with the right mix of investment, government support, and a focus on sustainability, Pakistan still has the potential to re-emerge as a global leader in textiles. Though the road ahead is difficult, it also holds the promise of a new beginning -- one that could restore the sector to its rightful place as the backbone of the national economy.
The writer is a retired chairman of the State Engineering Corporation.
