Textile survival

Why is it that a handbag crafted in the streets of Paris sells for hundreds of thousands of rupees, while the finest fabric produced in the modern mills of Faisalabad and Karachi is exported as mere “raw material” for a few dollars? Economic history clearly demonstrates that nations do not become prosperous through cheap labour, but through value addition. Pakistan’s textile industry today stands at a critical crossroads, where the real question is not one of cheaper electricity or government subsidies, but of adopting a sustainable model that can transform the country from a seller of low-cost goods into a creator of high-end global brands. A comparative global and domestic perspective provides a clearer understanding of Pakistan’s textile sector. There are several countries where labour and tax costs in the textile and garments industry are significantly higher than in Pakistan. In France and Italy, for instance, labour costs in the garments sector can be 30 to 70 times higher than in Pakistan—exceeding €40 per hour in France compared to just $0. 5 to $1 per hour in Pakistan—along with relatively higher corporate taxes. Yet, instead of focusing on cost minimization, these countries prioritize innovation, design, and brand identity, enabling them to command premium prices in global markets. Countries like France and Italy are regarded as global hubs of the luxury fashion industry. They are home to internationally renowned brands such as Hermès, Louis Vuitton, Chanel, Christian Dior, Givenchy, Gucci, Prada, Bottega Veneta, Versace, and Armani—brands that collectively represent a multi-billion-dollar industry. Their success is not rooted in low production costs, but in superior quality, craftsmanship, distinctive design, research and development, and strong brand identity, allowing them to market their products at exceptionally high prices. Against this global backdrop, a review of Pakistan’s textile industry reveals that the true drivers of success are not cheap labour or subsidies, but quality, value addition, branding, and research and development (R&D). According to 2025–26 estimates, Pakistan has approximately 450 to 500 operational textile mills, including spinning, weaving, processing, and composite units. However, the situation as of December 2025 remains concerning: around 144 textile mills have shut down, with over 100 closures concentrated in the spinning sector, while the remaining mills are operating at only 30 to 50 percent capacity. In recent months, interactions and consultations with industrialists, exporters, and field experts associated with the textile sector have consistently highlighted a critical concern: the core issue is not merely the cost of energy or government policy, but rather the lack of value addition within the industry, limited adoption of modern technology, and insufficient branding aligned with international standards. According to these stakeholders, if Pakistan remains confined to a cost-cutting approach, it will be unable to secure a sustainable position in the global market. In fiscal year 2025, textile exports stood at approximately $17. 88 billion, accounting for 55 to 60 percent of total exports. During the initial months of 2026, the value-added segment—comprising knitwear, ready-made garments, and home textiles—held a 55 percent share and recorded growth exceeding 3 percent. In contrast, low value-added products such as cotton yarn and grey fabric accounted for only 10 to 12 percent, with a significant portion of yarn exported as raw material to countries like Bangladesh and China. Only about 20 percent of companies are fully vertically integrated, while the remaining 80 percent operate in fragmented stages of production. Despite these challenges, several large groups have emerged as success stories. Companies such as Nishat Mills, Gul Ahmed, Sapphire Textile, Interloop, Artistic Milliners, Soorty, Yunus Textile, Liberty, and Novatex have distinguished themselves in global markets through forward integration, investment in modern machinery, branding, expansion of retail networks, compliance with international environmental and labour standards, and a strong focus on R&D. By prioritizing value over volume, these firms are securing better pricing—closely aligning with the strategic philosophy adopted by global luxury brands. On the other hand, the closure of mills cannot be attributed solely to external factors; internal weaknesses are equally significant. High energy costs (electricity ranging from 13 to 16 cents per unit compared to 5 to 9 cents in competing countries), expensive gas, heavy taxation, delays in sales tax refunds, super tax, high interest rates, and outdated machinery (20 to 30 years old, consuming 30 to 50 percent more energy) have all contributed to rising production costs. Poor cotton output, along with more favourable trade agreements enjoyed by competitors such as Bangladesh and Vietnam, has further eroded Pakistan’s market share. However, the most critical issues are internal: extremely low wages, minimal investment in R&D, compromises on quality, lack of customer support, and, in some cases, tax evasion. When sales decline and factories shut down, the burden is often placed entirely on the government, despite the fact that low wages do not translate into higher productivity due to inadequate worker training and limited technological advancement. This pattern is not confined to textiles alone but is prevalent across most business sectors in Pakistan, particularly in manufacturing. A model based on cheap labour, limited R&D, compromised quality, and non-transparent tax practices is inherently unsustainable. Countries like Bangladesh and Vietnam, despite higher costs, have gained market share through compliance and value addition, while Pakistan remains largely confined to the role of a raw material supplier. The reality is clear: the core challenge facing Pakistan’s textile industry is not cost, but quality, structure, and strategy. The world’s most successful brands prove that sustainable success is driven not by minimizing costs, but by maximizing value. If Pakistan adopts this direction, it can secure a strong position in global markets; otherwise, the current model will continue to offer only temporary relief. Copyright Business Recorder, 2026

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