"Textile exporters struggle amid rising costs and tariffs", 1 October 2025

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The sector’s challenges were underscored this week by concerns over external tariffs, inflationary pressures, and the aftermath of natural disasters..

Key issues include high tariffs on Pakistani textile exports, flood damage to cotton crops, and changes to the Export Facilitation Scheme (EFS). The US has imposed a 29pc effective tariff on Pakistani textiles, which includes a 19pc additional tariff and a 10pc base tariff. This makes Pakistani products less competitive compared to regional competitors like China and Vietnam, where production costs are lower...

Amir Aziz, another exporter, explained that his company has stopped accepting orders due to the high tariffs...

Floods earlier this year worsened the sector’s situation by damaging cotton crops, reducing both the quantity and quality of the crop...

In addition, outdated agricultural practices and poor seed quality have contributed to a drop in cotton quality, making it harder for the industry to produce yarn and textiles that meet export standards...

Recent amendments to the EFS have added to the industry’s burdens. Previously, the scheme allowed duty- and tax-free imports of raw materials for export production. The new rules, however, exclude cotton, yarn, and grey cloth from zero-rating, forcing exporters to pay taxes upfront, which strains liquidity and increases production costs...

Gul Ahmed Textile Mills Limited (GATM), one of Pakistan’s largest textile manufacturers, announced this week that it would suspend its apparel export operations. The company cited rising production costs, policy changes, and increased regional competition as the main reasons for the decision...

Additionally, rising fabric costs and high energy tariffs had significantly disrupted the cost structure and profitability of the apparel export segment...

Pakistan’s textile sector is grappling with a combination of external tariffs, flood-related disruptions, and domestic policy changes...