Pakistan’s textile industry is bracing for a tectonic shift in its sourcing strategy as domestic cotton production is projected to plummet nearly 46 per cent below official targets. By mid-December 2025, national arrivals at ginning factories reached a stagnant 5.3 million bales, a stark contrast to the Federal Committee on Agriculture’s (FCA) ambitious goal of 10.2 million bales. This supply chasm is forcing stakeholders to forecast a massive import requirement of 7 million bales - a move that ensures factory operationality but threatens to drain over $1.2 billion in foreign exchange reserves.
Climate shocks and policy gaps cripple domestic yields
The precipitous decline is being fueled by a ‘perfect storm’ of climatic and structural failures. While Sindh has surprisingly outpaced Punjab in early arrivals, the national crop has been decimated by climate-induced heatwaves and water shortages during critical planting windows. The repeated issuance of unrealistic national production targets complicates decision-making for exporters who must now lock in more expensive global contracts, notes Kamran Arshad, Chairman, All Pakistan Textile Mills Association (APTMA). Furthermore, the lack of enforcement in crop zoning - where sugar mills continue to encroach upon traditional cotton belts - has systematically eroded the acreage dedicated to the ‘white gold.’
Trade imbalance threatens apparel export competitiveness
While overall T&A exports showed a modest 2.8 per cent growth earlier this fiscal year, the rising import bill for raw materials is compressing margins. The industry is currently battling an 18 per cent sales tax on imported cotton, which, despite being refundable for exporters, has severely constricted liquidity. With November 2025 exports already showing a 2.7 per cent Y-o-Y decline, the sector risks a ‘permanent loss of orders’ as uncompetitive energy tariffs and raw material costs drive global buyers toward regional rivals. The challenge for 2026 will be balancing this import dependency against a fragile trade deficit that has already widened by 16 per cent.
