Pakistan's textile and apparel industry, the country's largest export earner, is pressing Prime Minister Shehbaz Sharif for immediate policy intervention, warning that structural weaknesses are stalling growth and eroding global competitiveness. The Pakistan Textile Council (PTC) has formally outlined four critical reforms needed to reverse a trend of near-stagnant exports. Main Developments Textile and apparel exports rose a mere 0.26% to $17.93 billion in fiscal year 2025-26, barely budging from $17.88 billion the previous year. The stagnation masks a sharper deterioration: exports in June 2026 plummeted 16.71% year-on-year and 23% month-on-month, according to the PTC's letter to the prime minister. The council identified three major structural challenges: high production costs, delays in operationalizing the expanded Export Refinance Scheme, and a deepening domestic cotton shortage. Rising labor costs, increased mandatory employer contributions, and distortions in industrial electricity tariffs have collectively squeezed profitability, the PTC said. Read also: AI Valuation Fears Drag Nasdaq Lower as Retail Sales Cool Background Pakistan's cotton production has collapsed to around 5.5 million bales, down dramatically from a peak of 14.8 million bales in 2011-12. The PTC attributes this decline to climate-related challenges, water shortages, and weakening farmer confidence, creating a widening gap between domestic supply and industrial demand. The government announced an expansion of the Export Refinance Scheme in the federal budget for FY2026-27, a move the PTC welcomed. However, the council expressed concern that the initiative remains non-operational, forcing exporters to rely on expensive commercial borrowing for working capital. Why It Matters Textiles are Pakistan's largest export industry, and its stagnation threatens foreign exchange earnings critical for the country's balance of payments. PTC Chairman Fawad Anwar emphasized the industry is not seeking protection but a level playing field through competitive energy pricing, timely financing measures, and a sustainable cotton supply. Addressing these structural issues is essential to restore export growth and maximize Pakistan's export potential. The sector's decline also has broader implications for employment and industrial competitiveness in an economy facing persistent external account pressures. What's Next The PTC has recommended four specific measures: reducing employers' Employees' Old-Age Benefits Institution (EOBI) contributions to 2% without affecting employee benefits, directing NEPRA to align industrial electricity tariffs with actual cost of service on a revenue-neutral basis, immediately operationalizing the expanded Export Refinance Scheme, and adopting a comprehensive national strategy to revive cotton production. The proposed cotton strategy includes introducing a credible support price mechanism, accelerating heat-tolerant seed varieties, protecting cotton-growing areas, and improving production forecasting. The council expressed confidence that timely implementation of these measures would help revive the sector and support sustainable economic growth.