Textile exporters warn of steep fall in Pakistan's exports from October to December: freight up to 2.5 times higher, finance scheme flaws

Key takeaways

• The Pakistan Textile Exporters Association (PTEA) says Pakistan's goods exports could fall steeply in the second quarter of FY27 (October to December).
• It blames weak demand from inflation-hit Western buyers, sea freight charges that have risen 1.5 to 2.5 times, and higher input and logistics costs.
• "The decline in export trade volume is unprecedented," says PTEA patron-in-chief Khurram Mukhtar.
• The association wants a temporary 6–8% Duty Drawback of Local Taxes and Levies (DLTL), quick payment of pending refunds and removal of cross-subsidies from industrial energy tariffs.
• It says the 4.5% Export Finance Scheme rate announced in the FY27 Finance Bill has not been put into practice, with banks charging 5.5% to 8.5%.

What the exporters are saying

In a statement on Sunday, reported by Dawn and Business Recorder, Mukhtar said the export sector was under pressure "from multiple directions". Buyers in Western markets are ordering less because of inflation at home, while higher shipping costs are eating into profit margins that were already thin.

He warned that only financially strong exporters would survive and that market share, once lost, would be "extremely difficult" to win back. The slowdown, he said, is hitting the whole textile chain, from ginning and spinning to weaving, processing and knitting, and weak domestic demand due to high inflation is making it worse.

Problems with the Export Finance Scheme

The PTEA's sharpest complaint is about the State Bank's Export Finance Scheme (EFS), which gives exporters cheaper loans:

• Rate not applied: The government announced a fixed 4.5% rate in the FY27 Finance Bill, but Mukhtar says banks charge at least 5.5% and some as much as 8.5%.
• Yarn and sugar: He says around Rs200 billion has gone to yarn exporters even though yarn is on the scheme's negative list, and questions why sugar exporters received financing.
• Value-added exporters left out: Some textile exporters perform five to six times above the State Bank's required level of twice the financing amount, yet cannot get allocations, he says.
• SME money may go unused: He welcomed a bigger EFS allocation for small and medium firms but doubted an extra Rs300 billion could be used, since it would need Rs600 billion of SME exports. He says last year's Rs100 billion for SMEs lapsed unused.

He also noted that the top 100 exporters account for up to 60% of export volume and argued that financing should follow each segment's share.

The industry's asks at a glance

Why it matters

Mukhtar describes exporters as the driving force of the entire textile value chain, so falling orders reach mills, small units and their workers down the line. "Historically, we have been reactive," he said, arguing that acting now would cost far less than trying to win back lost markets later.

What to watch

• Whether the commerce and finance ministries and the State Bank respond to the EFS complaints.
• Monthly export figures for October, which will show whether the warning is borne out.
• Any change to energy tariffs for industry.

This article is for general information and is not financial advice.