ISLAMABAD: Pakistan’s textile and apparel sector demonstrated resilience during the 2025–26 fiscal year, defying a broader national trade downturn to reach its highest level in four years. According to the Pakistan Textile Council’s (PTC) inaugural Annual Export Performance Report, textile and apparel exports edged up by 0.3% to touch $18 billion in FY2025-26, up from $17.95 billion in the previous fiscal year.
This marginal growth occurred against a backdrop of a 5.9% contraction in Pakistan’s overall exports, which slid from $32.04 billion in FY2024-25 down to $30.14 billion in FY2025-26. Consequently, the textile sector’s contribution to total national exports expanded to approximately 60%.
The PTC report—utilizing detailed HS-6 data sourced from the Pakistan Single Window and the Pakistan Bureau of Statistics (PBS)—highlights a profound structural evolution within the industry, contrasting the rapid rise of value-added manufacturing against a severe, ongoing collapse in the upstream raw material base.
Apparel and made-up articles reached $14.98 billion, representing 1.1% growth year-on-year and now accounting for 83.2% of total textile exports. Woven apparel under Chapter 62 hit a historic high of $4.295 billion with a 3.9% increase, while knitwear under Chapter 61 dipped 0.7% to $4.979 billion. Conversely, raw materials and intermediates dropped 3.4% to $3.03 billion, marking a five-year low. This upstream decay is linked directly to the domestic cotton crop, which yielded a meager 5.5 million bales last season—the lowest in three decades—forcing the industry to rely heavily on costly imports.
Geographically, the European Union remained the largest destination at $7.103 billion, down slightly from $7.248 billion, followed by the United States at $4.853 billion, which showed growth across seven of its top ten products, and the United Kingdom at $1.730 billion.
To safeguard competitiveness, the PTC has urged the government to reduce the headline corporate income tax rate from 29% to 15%, remove Super Tax exposure for exporters falling below the 80% export-ratio threshold, expedite sales tax refunds, automate income tax processing, guarantee uninterrupted energy tariffs, and implement an integrated national cotton strategy focusing on seed quality and traceability.
The dramatic collapse in domestic cotton production has laid bare the sector’s vulnerability to climate change and outdated agricultural practices. Unpredictable monsoon patterns, persistent pest attacks, and the lack of genetically modified, climate-resilient seed varieties have decimated local yields in recent years. Consequently, spinning mills have been forced to import millions of bales to keep production lines running. This heavy reliance on imported raw materials not only places additional strain on Pakistan’s foreign exchange reserves but also squeezes profit margins across the entire value chain, complicating the pricing of final export goods.
Furthermore, the soaring cost of doing business remains a formidable hurdle for the industry’s continued expansion. Industrial electricity and gas tariffs in Pakistan are currently among the highest in the region, exacerbated by the recent withdrawal of various energy subsidies. This volatile pricing environment makes it increasingly difficult for local manufacturers to compete with regional heavyweights like Bangladesh, Vietnam, and India, where consistent state-backed incentives and lower utility costs provide a significant edge in the hyper-competitive global apparel market.
As the industry looks toward the future, shifting regulatory frameworks in key markets are emerging as both a major challenge and a transformative opportunity. With the European Union phasing in stringent environmental, social, and governance (ESG) regulations, Pakistani textile leaders are accelerating their investments in green technology. Top-tier exporters are rapidly scaling up captive solar infrastructure, implementing zero-liquid-discharge water recycling plants, and pursuing global traceability certifications. These measures are becoming essential to ensure compliance with the EU’s upcoming Carbon Border Adjustment Mechanism (CBAM) and strict circular economy directives.
Ultimately, the FY2025-26 figures underscore a pivotal moment for Pakistan’s economic backbone. While the structural shift toward value-added garments proves that the sector can adapt to shifting global demands, maintaining this upward trajectory will require more than just entrepreneurial resilience. It demands cohesive policy execution, sweeping agricultural reforms, and a stabilized macroeconomic environment to transform today’s hard-won $18 billion milestone into a foundation for sustainable, long-term export growth.