Textile makers warn of steep decline in exports from Oct to Dec

Pakistan's textile sector warns of a sharp drop in exports from October to December, as the country's export association cites weak demand in Western markets, rising freight costs, and escalating production expenses. PTEA Patron-in-Chief Khurram Mukhtar stated that the multiple pressures on the export sector are threatening its competitiveness and share in international markets.

Inflation in Western markets has reduced demand from buyers, while sea freight charges have surged by 1.5 to 2.5 times, straining exporters' already thin profit margins. Rising input and logistics costs are further weakening the competitiveness of Pakistani products. The decline in export volume is unprecedented, warning that only financially strong exporters will survive the current conditions.

The situation has also impacted the entire textile value chain, from ginning to knitting, and is exacerbated by weak domestic demand due to high inflation. Mukhtar urged the government to provide a Duty Drawback of Local Taxes and Levies (DLTL) scheme at a rate of 6pc to 8pc to help exporters maintain their international market share.

The government has also announced a 4.5pc Export Finance Scheme rate, but banks are charging higher rates, ranging from 5.5pc to 8.5pc. Mukhtar also pointed out anomalies in the Export Finance Scheme, such as financing being provided to sugar exporters, a highly regulated sector, while yarn exporters, eligible for financing, are being denied.

Despite the additional Rs300bn allocation for SMEs, he questioned whether it could be effectively utilized. Mukhtar proposed a Rs140bn financing package for modernization and upgrading of four major textile sectors, emphasizing the need for a proactive approach to strengthen the textile supply chain and improve international competitiveness.