Pakistan’s textile exporters have issued an urgent public warning that the sector faces a dangerous combination of disadvantages threatening its $17.85 billion annual contribution to the national economy. Textile exporters in Pakistan say high energy costs, delayed tax refunds, the EU-India Free Trade Agreement, and an influx of discounted Chinese goods are eroding their competitiveness at the worst possible moment. The top textile exporters warn that without immediate government action, Pakistan will permanently lose market share in European markets to India and Bangladesh — with devastating consequences for exports, employment, and the national economy.
Background: Why Are Textile Exporters in Pakistan Warning of Disadvantages?
Textile exporters are the backbone of Pakistan’s economy. The sector accounts for 60 percent of Pakistan’s total merchandise exports and is the country’s single largest industrial employer — making the performance of textile exporters in Pakistan critical to foreign exchange earnings, employment, and economic stability.
The list of textile exporters in Pakistan stretches from vertically integrated giant mills in Faisalabad and Karachi to thousands of small and medium garment factories across Lahore and Sialkot. Top textile exporters include Interloop Holdings, Nishat Mills, Gul Ahmed Textile, Sapphire Fibres, Al-Karam Textile, and Kohinoor Textile Mills — all of which supply major international brands including Nike, Adidas, H&M, Marks & Spencer, and Zara.
After a modest recovery in 2025 that lifted textile exporters’ revenue to approximately $17.85 billion, the sector now faces a perfect storm of external and internal pressures that industry leaders say could reverse those gains entirely in 2026.
Details: Textile Exporters in Pakistan — The Full Disadvantages Breakdown
EU-India FTA — The Biggest Threat to Textile Exporters
The EU-India Free Trade Agreement — signed on January 27, 2026 — has sent shockwaves through Pakistan’s textile exporters. The deal grants India near-total duty-free access to the EU for textiles, apparel, leather, and footwear with immediate effect.
Pakistan’s textile exporters currently enjoy GSP Plus status — providing zero or reduced duties on approximately 66 to 80 percent of export lines to the EU. Textile exporters in Pakistan send approximately $6.2 billion worth of goods to the EU annually — marginally ahead of India’s previous $5.6 billion, even though India previously faced an 8 to 12 percent tariff.
That tariff advantage is now gone. India’s textile exporters enter EU markets at the same zero-duty level as Pakistan’s top textile exporters — but with lower production costs, cheaper energy, better logistics, and no requirement to comply with 27 international human rights and labour conventions that GSP Plus imposes on Pakistani textile exporters.
Energy Costs — Core Disadvantage for Textile Exporters in Pakistan
Musadaq Zulqarnain, chairman of Interloop Holdings — one of Pakistan’s largest top textile exporters — told Arab News that energy costs were the sector’s single biggest handicap. Industrial electricity tariffs in Pakistan are 25 to 30 percent higher than those faced by textile exporters in Bangladesh, India, and Vietnam.
Textile exporters say industrial power prices need to fall below 8 to 10 rupees per unit for them to remain competitive. Without that reduction, textile exporters in Pakistan will continue losing orders to regional rivals who can offer the same quality at lower prices.
APTMA textile exporters formally raised the energy cost issue in direct meetings with Finance Minister Aurangzeb in January 2026. Aurangzeb acknowledged the concern and confirmed energy affordability remains a key government priority — but textile exporters say words have not yet been matched by policy action.
Chinese Diverted Goods — New Competition for Textile Exporters
A new and unexpected disadvantage for textile exporters in Pakistan is the growing influx of diverted Chinese textile shipments. As US trade restrictions on China tighten, surplus Chinese inventory is being redirected to EU and Middle Eastern markets at heavily discounted prices — directly competing with Pakistani textile exporters in their core export categories.
EXIM Bank CEO Shahbaz H Syed warned at the Global Procurement and Supply Chain Summit 2026 that this created a perfect storm for textile exporters — as they face simultaneous pressure from Indian competition above and Chinese price dumping below.
Delayed Tax Refunds — Cash Flow Crisis for Textile Exporters in Pakistan
Textile exporters in Pakistan raised serious concerns in meetings with Federal Commerce Minister Jam Kamal Khan about delays in tax refunds. These delays are placing significant financial strain on businesses — restricting liquidity, disrupting production cycles, and forcing top textile exporters to borrow at high interest rates to cover operating costs that should be covered by refunds already owed to them.
Pakistan Textile Council Chairman Fawad Anwar formally demanded fixing tax on textile exports at 1 percent as a full and final settlement, immediately launching the DLTL scheme with a 5 percent drawback rate for value-added textile exporters, and withdrawing super tax and advance tax on textile exporters with immediate effect.
EU Carbon Border Adjustment Mechanism — Next Threat to Textile Exporters
The EU’s Carbon Border Adjustment Mechanism — currently applied to cement and steel — is expected to be extended to textiles by 2027. Industry estimates suggest CBAM-related levies could offset the entire 10 to 12 percent price advantage currently provided by GSP Plus — effectively neutralising the foundational benefit that Pakistan’s textile exporters have relied on for the past decade.
List of Textile Exporters in Pakistan — Who Faces Most Risk
The list of textile exporters in Pakistan most exposed to these compounding disadvantages includes:
Top Textile Exporters — At-Risk List:
Interloop Holdings — Faisalabad — supplies Nike, Adidas, H&M, M&S, Zara
Nishat Mills — vertically integrated top textile exporter — EU and US markets
Gul Ahmed Textile — home textiles — major EU-facing exporter
Sapphire Fibres — denim and apparel textile exporter
Al-Karam Textile — EU-facing garment and home textile exporter
Kohinoor Textile Mills — major fabric and yarn textile exporter
Hundreds of small and medium textile exporters across Faisalabad, Karachi, and Lahore
Pakistan Textile Council Chairman Fawad Anwar confirmed the crisis is systemic — affecting all textile exporters in Pakistan simultaneously across all major product categories and all export markets.
What Textile Exporters in Pakistan Are Demanding
Top textile exporters have collectively demanded the following from the government:
Reducing industrial power tariffs to nine cents per unit for all textile exporters in Pakistan
Fixing export tax at 1 percent as full and final settlement for textile exporters
Immediately launching the DLTL scheme with 5 percent drawback rate for value-added textile exporters
Withdrawing super tax and advance tax on textile exporters with immediate effect
Suspending EOBI and SESSI/PESSI contributions to reduce payroll burden on textile exporters
Providing targeted market diversification support — particularly to help textile exporters in Pakistan access Africa and Central Asia
Quotes
Musadaq Zulqarnain, Chairman Interloop Holdings, one of Pakistan’s top textile exporters: “The real problem for us is the cost of production. Because of this, the entire textile industry is suffering. Industrial electricity tariffs in Pakistan are 25 to 30 percent higher than those faced by regional competitors.”
Saquib Magoon, textile exporters’ representative, on EU market access risk: “Once India secures zero-rated access under the EU deal, Pakistan’s advantage will vanish and our exports could suffer a severe blow. Once a market is lost, regaining entry becomes extremely difficult.”
Fawad Anwar, Chairman Pakistan Textile Council, on systemic crisis facing textile exporters: “Pakistan’s textile exporters are being asked to compete globally with structurally higher energy costs, fragmented taxation, delayed refunds, and policy unpredictability. These indicators clearly qualify for decisive government intervention.”
APTMA Chairman, on current conditions for textile exporters in Pakistan: “Export orders remain weak. Mills are operating below capacity. No new investment is being made due to policy uncertainty and excessive cost of borrowing.”
Shahbaz H Syed, President and CEO EXIM Bank Pakistan, on environment for textile exporters: “The current environment is a perfect storm for textile exporters — driven by rising energy costs, aggressive sustainability regulations, and redirected global supply flows from China.”
Impact: What the Disadvantages Mean for Pakistan’s Textile Exporters
For Export Revenue
An erosion of textile exporters’ competitiveness in EU markets — where they send $6.2 billion annually — would directly widen Pakistan’s trade deficit, increase dependence on IMF bailouts, and accelerate deindustrialisation in labour-intensive industries. Economists warn that once top textile exporters lose EU market share to India, regaining it takes years — if it is possible at all.
For Employment
With textile exporters in Pakistan serving as the country’s largest industrial employer, declining competitiveness and falling orders directly threaten millions of jobs — from spinning mill operators and garment workers to transport, logistics, and packaging workers across the supply chain.
For the IMF Programme
Pakistan’s textile exporters warn that the government’s response must match the urgency of the situation. Without targeted support comparable to the Rs1.2 trillion COVID-19 relief package, the structural decline of textile exporters in Pakistan will undermine foreign exchange earnings — and complicate Pakistan’s ability to meet its IMF programme targets.
Conclusion
Pakistan’s textile exporters have issued their clearest warning yet — the disadvantages are now systemic, structural, and urgent. The EU-India FTA has neutralised Pakistan’s greatest tariff edge. Energy costs remain 25 to 30 percent above regional competitors. Tax refund delays are strangling cash flow. Chinese textile exporters are flooding markets. CBAM is coming by 2027.
The list of textile exporters in Pakistan represents the most important industrial sector in the country’s economy. Top textile exporters have the capacity to compete globally — if the government acts on energy costs, tax reform, and market diversification support now.
Textile exporters in Pakistan have warned. The government has listened. The question is whether that listening produces action before Pakistan’s most important export sector permanently loses ground to rivals who are getting the support Pakistan’s textile exporters are still waiting for.
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