Textile exporters fear sharp decline in Q2 FY27 amid weak Western demand, rising freight costs

Textile exporters in Pakistan warn that shipments could fall sharply in the October to December quarter of FY27, as Western demand weakens and freight costs rise. According to Profit, Khurram Mukhtar, Patron-in-Chief of the Pakistan Textile Exporters Association, said sea freight charges had risen 1.5 to 2.5 times, and the downturn threatens the entire chain from ginning to knitting.

Mukhtar urged the government to provide temporary support under the Duty Drawback of Local Taxes and Levies (DLTL) scheme at 6 to 8 per cent, clear pending refunds and end cross-subsidies in industrial power tariffs. He also said the 4.5 per cent Export Finance Scheme rate for FY27 has not been applied, with banks charging exporters between 5.5 and 8.5 per cent. He further claimed that about Rs200 billion of EFS money reached yarn exporters, although yarn is on the scheme's negative list.

The PTEA proposes a Rs140 billion financing plan to upgrade technology and modernise the textile supply chain, with weaving and processing each getting Rs50 billion. Mukhtar also questioned the extra Rs300 billion set aside for SMEs under EFS, noting that last year's Rs100 billion remained unused. He called for a 10-year export strategy, warning that regaining lost markets would cost more than preventive steps.