Pakistan’s value-added textile and apparel sector demonstrated relative resilience in the first half of fiscal year 2025–26 (1H FY26), with exports rising by more than three percent to USD 7.70 billion, according to data released by the Pakistan Textile Council (PTC).
Growth was largely driven by strong performances in knitwear and non-knit apparel, reinforcing the sector’s gradual shift toward higher value addition. The broader textile sector remained the backbone of Pakistan’s export economy, with total textile shipments reaching USD 9.19 billion during July–December FY26.
This marked a one percent increase year-on-year and accounted for approximately 61 percent of the country’s total exports, underlining the sector’s continued macroeconomic importance amid external and domestic challenges.
Despite the overall improvement, export momentum weakened toward the end of the period. Textile exports declined by nine percent year-on-year and five percent month-on-month in December 2025, reflecting softer global demand, seasonal factors and ongoing cost pressures faced by exporters.
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A closer look at product categories reveals a clear divergence within Pakistan’s textile export basket. Traditional textile exports covering yarns, fabrics and other upstream products under HS Chapters 50–60 continued their downward trend.
Exports from these categories fell to USD 1.49 billion in July–December FY26, compared with USD 1.65 billion in the same period a year earlier, highlighting persistent structural stress in spinning and weaving segments.
In contrast, value-added textile and apparel exports (HS Chapters 61–63) expanded from USD 7.46 billion to USD 7.70 billion, registering growth of over three percent.
Within this segment, knitwear exports increased by 4.1 percent, non-knit apparel by 4.9 percent, and other made-up textile articles by 1.3 percent, reflecting stronger global demand for finished garments and better price realization compared to raw or semi-processed textiles.
On the market front, the European Union remained Pakistan’s largest export destination, with textile and apparel shipments rising to USD 3.67 billion in 1H FY26. The United States followed with exports totaling USD 2.47 billion, while shipments to the United Kingdom stood at USD 892 million, showing a marginal decline.
Exports to Bangladesh and the United Arab Emirates reached USD 311 million and USD 324 million, respectively. While the EU continues to anchor Pakistan’s export performance, the PTC noted that limited market diversification poses medium-term risks, particularly amid shifting trade policies and demand patterns in major economies.
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Longer-term trends show relative stability in key Western markets. Textile exports to the US peaked at USD 2.87 billion in FY22 before easing to USD 2.47 billion in FY26, while exports to the UK declined modestly from USD 916 million to USD 892 million over the same period.
In contrast, shipments to the UAE have grown steadily, rising from USD 167 million in FY22 to a five-year high of USD 324 million in FY26, signaling potential for deeper engagement with regional markets.
Key recommendations include regionally competitive and predictable energy pricing, alignment of wage and overtime regulations with competitor countries such as Bangladesh and Vietnam, reduction of taxes and zero-rating of inputs under the Export Facilitation Scheme, and time-bound incremental export rebates for HS Chapters 61–63 linked to value addition and compliance with SDGs and ESG standards.
The council also called for structural reforms in the upstream textile sector, particularly to improve cotton quality and yield, reduce production costs for spinning and weaving units, and strengthen access to finance through the EXIM Bank, enhanced Export Facilitation Scheme (EFS) and Long-Term Financing Facility (LTFF) limits.
Additional recommendations include financing for innovation, renewable energy and green projects, and the introduction of a five-year textile and apparel policy with legal backing, supported by transparent monthly monitoring through published key performance indicators.
Commenting on the data, PTC Chairman Fawad Anwar said the 1H FY26 analysis highlights a growing structural divide within Pakistan’s textile industry. Traditional textile exports, particularly yarns and fabrics, continued to decline due to high costs of doing business, uncompetitive energy tariffs and tax frictions, he noted.
“In contrast, Pakistan’s value-added textile segment has shown resilience and growth, reinforcing that the country’s export competitiveness increasingly lies in finished products rather than raw or semi-processed textiles,” Anwar said.
He added that maintaining this momentum would depend on supportive government policies, including predictable labor regulations, regionally competitive wage frameworks and a tax regime comparable to peer exporters.
According to the PTC, such reforms are critical for protecting employment, boosting foreign exchange earnings and enabling Pakistan to move up the global textile value chain at a time when international competition is intensifying and buyers are placing greater emphasis on sustainability, compliance and value addition.
