Innovation to rebuild textile exports – Pakistan & Gulf Economist

• Pakistan must adopt innovation driven growth to rebuild textile exports and regain global competitiveness

Pakistan’s textile sector has long served as the backbone of the national economy, contributing nearly 55 to 60 percent of the country’s exports and providing employment to more than 10 million people. Despite its scale and significance, the sector has been unable to match global competitiveness due to rising energy costs, outdated machinery, increasing price pressures, and limited value addition. While Pakistan remains one of the world’s largest cotton producers, the real challenge lies not in production capacity but in the absence of innovation-driven growth. Without adopting modern techniques and research-backed practices, Pakistan’s textile exports will continue to shrink in an intensely competitive global landscape.

Global statistics reveal that the textile and apparel market is poised to exceed $1.7 trillion by 2027, driven by rapid fashion cycles, shifting consumer behaviour, and e-commerce expansion. Countries such as Bangladesh, Vietnam, India, and China have captured a significant share of this growth by aggressively modernizing their industries. Bangladesh’s textile exports have surpassed $45 billion, Vietnam’s $38 billion, and India’s exports are fast approaching $30 billion, while Pakistan’s exports remain stagnant around $16–17 billion. The stagnation reflects structural inefficiencies rather than market limitations, highlighting a widening technology and innovation gap.

One of the heaviest burdens on the sector is the persistent energy crisis. Energy accounts for nearly 35 percent of production costs, and unstable gas supply, high power tariffs, and inconsistent voltage have forced many textile mills to operate below their production capacity. During 2024–25, several medium-sized textile units in Punjab either closed temporarily or shifted to costly diesel-based alternatives. Compared to Pakistan, regional competitors enjoy lower energy tariffs and more stable supply chains, enabling them to maintain competitive pricing and faster order execution. Without a consistent and affordable energy policy, the industry cannot regain its lost competitiveness.

A major factor undermining Pakistan’s textile performance is the widespread use of obsolete machinery. More than 65 percent of textile units continue to rely on machines installed decades ago, resulting in low efficiency, high waste, slow turnaround, and limited ability to produce high-quality finishes. Today’s global textile buyers demand sophisticated fabrics with specialized textures, eco-friendly coatings, antibacterial properties, wrinkle resistance, and high-performance features.

Countries like Bangladesh and Vietnam have adopted state-of-the-art machinery supported by targeted financing facilities, enabling them to respond quickly to global trends. Pakistan must invest in advanced technologies such as digital printing, automated cutting, robotic stitching, and AI-based quality control systems to bridge this widening gap.

Price competition has also intensified, leaving Pakistani manufacturers with thin margins. Production costs in Pakistan remain significantly higher due to expensive utilities, rising financing rates, logistics challenges, and compliance burdens. A typical exporter in Pakistan pays 20–25 percent more for energy, 15–18 percent more in financing costs, and 10–12 percent more for freight and logistics than regional competitors. While Pakistani cotton quality is internationally recognized, global buyers prioritize reliability, speed, and cost-efficiency areas where Pakistan continues to struggle. As a result, several major international brands have shifted long-term sourcing to Vietnam and Bangladesh, where automated production lines and efficient supply chains enable lower prices and faster delivery.

Another critical concern is the lack of value addition. Pakistan continues to export a large volume of low-value products such as raw cotton, yarn, and grey fabric, while less than 30 percent of its exports come from high-value textiles like fashion apparel, home textiles, technical fabrics, and sportswear. In comparison, Bangladesh exports 85 percent value-added apparel while Vietnam exports more than 80 percent finished garments. China, meanwhile, excels in technical and industrial textiles with strong research support. To increase its export earnings, Pakistan must shift toward high-value categories such as moisture-wicking fabrics, sports performance materials, medical textiles, recycled fibre blends, and organic sustainable fabrics. These segments fetch higher global prices and tap into emerging consumer preferences for eco-friendly products.

The revival of Pakistan’s textile exports depends heavily on strengthening research, innovation, and collaboration across the industry. Pakistan invests less than 0.3 percent of its GDP in research and development, which is far below levels in India, China, and Bangladesh. Stronger collaboration between textile universities, research centres, and industrial units is essential for developing new fabrics, improving dyeing techniques, and adopting sustainable production processes. The government must also establish technology modernization funds to help manufacturers upgrade outdated machinery through low-cost financing. Similarly, promoting sustainable textiles, adopting digital supply chain tools, and creating innovation labs for small and medium-sized enterprises can accelerate the transition to value-added exports.

Pakistan’s textile industry stands at a defining point. Competing solely on low cost is no longer feasible in an era driven by innovation, automation, and sustainability. The future belongs to nations that prioritize modernization and research-oriented growth. If Pakistan adopts a focused strategy to strengthen technology, improve productivity, and develop high-value products, the textile sector can once again become a strong driver of economic progress. Without these reforms, however, the country risks losing further ground in the global textile arena, where innovation is now the ultimate currency of competitiveness.

The author is an accomplished academic and management professional, currently serving as an Assistant Professor in the Department of Business Administration at the HANDS Institute of Development Studies, Karachi.