Pakistan Textile Council Urges Immediate Policy Reforms to Save the Industry

The Pakistan Textile Council (PTC) has called on Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb to implement immediate policy reforms to prevent the collapse of the textile industry.

In a letter addressed to the minister, PTC Chairman Fawad Anwar warned that the textile sector, which accounts for nearly 60% of Pakistan’s export earnings and employs over 15 million people, is facing severe financial challenges.

The council pointed out that surging energy costs have become a major obstacle, with industrial electricity tariffs now at 16-18 cents per kWh—almost double the rates in countries like Vietnam, Bangladesh, India, and China. Gas prices for captive power plants have risen to $13-14 per MMBtu, compared to $5-8 in regional competitors. These rising costs, combined with additional capacity charges and surcharges, have driven up production costs and reduced the sector’s competitiveness in global markets.

Working capital costs have also skyrocketed from 2% to about 14%, while tax policies under the International Monetary Fund (IMF) program, such as minimum turnover and super taxes, have pushed effective tax rates to over 50%. These financial pressures have severely impacted the low-margin, high-volume textile industry, making reinvestment nearly impossible due to soaring short-term interest rates.

PTC expressed concerns about the long-term impact of the crisis, citing similar situations in countries like Argentina and Greece, which led to economic recessions, social unrest, and the permanent loss of industrial capacity. The council warned that if financial challenges continue, many textile mills may close, leading to widespread unemployment, civil instability, and major economic disruption.

Additionally, some textile manufacturers have begun shifting operations abroad due to rising costs in Pakistan, threatening the country’s position as a key player in global textile manufacturing.

The council urged the government to adopt a balanced approach to reforms, ensuring that macroeconomic goals do not compromise the industry’s sustainability. They called for sustainable energy pricing, reduced capacity charges through renegotiations with power producers, and competitive gas rates for industrial use. PTC also advocated for a fair taxation framework to maintain the industry’s profitability and preserve vital foreign exchange inflows.

Chairman Fawad Anwar stressed the urgency of a measured policy response, stating, “The industry is at a critical juncture. Immediate and thoughtful measures are required to prevent irreversible damage while securing Pakistan’s economic stability.”

The textile sector, which has been a cornerstone of Pakistan’s economy, is now at risk of losing its competitive edge unless swift and decisive government action is taken