In 2023, Pakistan’s textile industry—the backbone of its export economy—found itself navigating a precarious landscape. Amid global economic slowdowns, energy shortages, political instability, and a depreciating rupee, textile manufacturers faced one of the toughest years since the COVID-19 pandemic.

Yet, despite these challenges, the sector demonstrated resilience, with leading exporters pivoting towards value-added goods, sustainability practices, and digitization to remain globally competitive.

The Numbers Tell the Story

The textile sector contributes around 60% to Pakistan’s total exports, employs over 10 million people, and constitutes 8.5% of GDP. According to data from the Pakistan Bureau of Statistics (PBS) and APTMA (All Pakistan Textile Mills Association):

Textile exports stood at $16.5 billion in FY 2022-23, a decline from $19.3 billion in FY 2021-22, due largely to high energy costs and global demand contraction.

Cotton production plummeted to 4.5 million bales, the lowest in decades, due to climate-induced floods in Sindh and Punjab.

Yarn and fabric exports declined, while ready-made garments and knitwear exports showed modest growth due to better margins.

Energy Crisis and Industrial Shutdowns

2023 was marked by severe energy shortages, especially in Punjab—home to over 70% of Pakistan’s textile mills. The suspension of gas supply during peak winter months, coupled with high electricity tariffs, led to factory closures and reduced operating capacity.

APTMA claimed that nearly 30% of textile capacity remained idle throughout the year, leading to job losses and missed export orders. The lack of a regionally competitive energy tariff (RCET) particularly impacted small and medium enterprises (SMEs), which lacked the reserves to weather extended outages.

Currency Devaluation and Import Restrictions

The sharp devaluation of the Pakistani Rupee, which fell from PKR 225 to over PKR 280 per USD, made imported machinery and raw materials costlier. The State Bank of Pakistan’s restrictions on opening Letters of Credit (LCs) for importing raw materials and spare parts further choked production cycles.

Although the weaker rupee made Pakistani exports more attractive globally, supply chain disruptions due to import restrictions offset any potential gains.

Pivot to Value Addition and Compliance

One silver lining in 2023 was the industry’s pivot towards value addition and sustainability. Leading players like Interloop Limited, Nishat Mills, and Artistic Milliners accelerated efforts to comply with global environmental, social, and governance (ESG) standards.

Artistic Milliners launched a new LEED-certified denim facility focused on circular fashion.

Interloop partnered with European retailers to supply organic cotton and waterless dyed hosiery products.

Nishat began digitizing its supply chain using ERP and blockchain-enabled transparency tools to meet EU compliance demands.

These steps were crucial, especially as the EU’s GSP+ trade preferences were under review, with human rights and environmental compliance as central criteria.

Global Recession and Order Compression

Pakistan’s textile exporters faced shrinking global demand in 2023 as the U.S. and European economies dealt with inflation and recessionary pressures. Apparel retailers cut back on new orders, delayed shipments, and sought extended payment terms.

Major retailers like H&M, Zara, and Target were reported to have slashed procurement volumes across South Asia, affecting Pakistan’s ready-made garment exporters the most.

Government Support: Too Little, Too Late?

The industry repeatedly appealed for policy clarity, a long-term energy package, and export refinancing schemes, but political instability and changes in finance ministry leadership led to inconsistent support.

APTMA called for:

Immediate gas/electricity subsidies for export-oriented units

Resumption of Export Finance Scheme (EFS) and Long-Term Financing Facility (LTFF)

Cotton revival plan through better seeds and water management

While some relief was announced in the federal budget, it was seen as reactive rather than strategic.

Conclusion: Resilient but Not Invincible

2023 underscored the fragility and resilience of Pakistan’s textile sector. Though deeply affected by macroeconomic headwinds, energy disruptions, and climate shocks, leading firms displayed adaptability by embracing value addition, digitization, and ESG compliance.

For long-term sustainability, however, Pakistan must invest in cotton revival, ensure competitive energy tariffs, and adopt predictable export policies. The textile sector remains a pillar of economic stability—but without structural reforms, its potential could continue to erode.

References:

Pakistan Bureau of Statistics – Textile Export Data (2022–23)

APTMA Annual Report 2023

State Bank of Pakistan – Economic Outlook 2023

Dawn – Textile Sector Warns of Collapse Without Energy Subsidies, April 2023

Business Recorder – GSP+ Compliance: Textile Industry’s Sustainability Shift, June 2023

The News – Artistic Milliners’ New Green Facility Launch, March 2023

Interloop CSR Report 2023