Pakistan Textile Industry Heartbroken After SBP Announcement

Pakistan's textile industry is facing significant challenges following the State Bank of Pakistan's decision to raise its policy rate by 50 basis points to 12 percent. The Pakistan Textile Exporters Association (PTEA) has expressed deep concern over the move, stating that it will increase production costs and discourage investment.

Industry leaders argue that the higher borrowing costs will weaken exporters' ability to compete in international markets, particularly against rivals in India, Vietnam, and China, where industrial term loans carry lower annual rates. PTEA Chairman Rehan Naseem Bharara emphasized that Pakistani businesses face even higher interest rates once banks' spreads are included.

He stressed the urgent need for coordinated efforts to reduce production costs and support export-led growth, as Pakistani exporters are already struggling to finance daily operations and expand. Exporters warn that the increased interest rates could worsen their challenges and undermine the government's export-led growth plans.

Additionally, shipping costs have surged by nearly 200 percent, further exacerbating the industry's difficulties. The PTEA calls for an export-focused policy framework that recognizes the textile value chain as an interconnected industry, rather than implementing separate taxation measures for its different components.