Pakup Tech

Export-Led Revival Pakistan’s Textile Sector in the Post-COVID World

In 2022, Pakistan’s textile industry experienced a robust recovery, bouncing back from the global disruptions caused by the COVID-19 pandemic. With rising demand from international markets, a government-led export push, and increased investment in modernization, the sector was hailed as the backbone of Pakistan’s economic recovery in a difficult macroeconomic environment.

A Post-COVID Rebound in Exports

Pakistan’s textile exports surged in 2022, with the Pakistan Bureau of Statistics reporting record-high textile exports of over $19.3 billion, up from $15.4 billion in 2021. This was largely driven by home textiles, knitwear, and garments, as global buyers sought to diversify supply chains away from China and re-engage with reliable exporters like Pakistan.

Major export destinations included the United States, European Union, and United Kingdom, where demand for casualwear and home goods remained high post-pandemic. Pakistani exporters like Nishat Mills, Interloop, and Gul Ahmed reported stronger order books and capacity expansions.

Government Policy and Energy Subsidies

The Government of Pakistan, under the Textile and Apparel Policy 2020–25, provided key incentives to boost exports, including:

Reduced energy tariffs for exporters
DLTL (Duty Drawback of Local Taxes and Levies) continuation
Easy credit via the Export Finance Scheme (EFS)
Zero-rated sales tax on inputs

Energy subsidies played a crucial role, as the textile industry is energy-intensive. In Punjab and Sindh, the provision of RLNG at concessional rates helped large exporters remain competitive despite global commodity price shocks.

However, these subsidies were a double-edged sword. By mid-2022, the IMF raised concerns over Pakistan’s mounting fiscal burden, urging the government to rationalize energy support. The policy dilemma between supporting exports vs fiscal prudence continued to hang over the industry.

Capacity Expansion and New Investments

Many textile groups announced new investments to expand capacity and improve technology. Examples included:

Interloop Ltd. investing over $300 million in vertical integration.
Artistic Milliners, a leading denim exporter, expanding into sustainable washing and finishing units.
Soorty Enterprises and US Denim adopting green technologies to meet ESG standards.

There was also growing interest in value-added segments such as technical textiles, performance fabrics, and fashion garments, moving Pakistan up the global textile value chain.

Cotton Crisis and Raw Material Dependence

Ironically, despite being an agricultural country, Pakistan faced a severe cotton shortfall in 2022. Floods in Sindh and Southern Punjab damaged cotton crops, forcing textile manufacturers to import over $1.5 billion worth of cotton from Brazil, the U.S., and Central Asia.

This raised concerns about long-term sustainability. Stakeholders emphasized the need to revive the domestic cotton sector through better seeds, water management, and support for cotton farmers.

Labor, Compliance, and ESG Focus

Global buyers increasingly demanded environmental and social compliance, and Pakistani exporters responded by:

Installing solar power units and effluent treatment plants
Certifying facilities under WRAP, BCI, and GOTS standards
Improving labor rights and women's inclusion in the workforce

International brands placed emphasis on traceability and green sourcing, pushing Pakistani mills to digitize supply chains and implement ESG metrics.

Challenges Ahead

Despite the strong performance, the textile sector in 2022 still faced headwinds:

Political instability and change of government affected policy continuity
Currency devaluation increased costs of imported machinery and inputs
Logistics bottlenecks and port congestion delayed shipments
Energy outages in summer months affected production schedules

Conclusion

By the end of 2022, Pakistan’s textile sector had proven its resilience and adaptability. However, to sustain growth, it needed to address structural challenges such as raw material dependency, innovation, and infrastructure constraints. With coordinated efforts between government, industry, and international partners, Pakistan had the potential to position itself as a leading global textile hub in the decade ahead.