Pakistan's towel exports decline as US tariffs, EU trade uncertainty threaten sector

Pakistan's towel exports fell 1.3% year-on-year to Rs298 billion in FY26, according to a study by the Pakistan Credit Rating Agency (PACRA). The study linked the decline to fewer shipments, higher production costs and doubts over US tariffs and EU trade preferences. Shipments dropped 3.1% to roughly 219,000 tonnes, compared with 226,000 tonnes in FY25, while output also fell 3.1% to about 219,200 tonnes.

Calendar 2025 saw Pakistan's towel exports fall 2.0% to $1.146 billion. Together, the five biggest global exporters, which include Pakistan, held a combined share of 74.7%, down from 76.4% in 2024. The United States stayed Pakistan's largest single market in FY26 with a 23.7% share, while the United Kingdom took 13.9%.

Costs at home, including freight, raw materials, input taxes and energy, continued to hurt competitiveness, with raw cotton making up about 61% of direct costs. PACRA added that five export-oriented industries saw their regionally competitive energy tariffs and gas pricing withdrawn in March 2023, which further raised production costs. For the EU, GSP+ zero-duty access expires at the end of 2026, with a transition period running to 2028, and the bloc took about 41% of FY26 exports.