The cotton textile industry, the pride and joy of Pakistan’s agro-industry, is going through a severe downturn due to the ongoing economic crisis in the country.
One of the top textile producers in the world, Pakistan’s textile exports were valued at $19.3 billion in 2021. It constituted more than half of Pakistan’s total exports that year.
However, many small textile mills and manufacturing units in Pakistan that make bedsheets, towels and denims for export to Europe and the US have been shut down due to a severe shortage of cotton. As if that was not enough, the country’s cotton textile industry has been hit with a recent tax hike.
The crisis in the cotton textile industry comes as Pakistan is struggling with alarmingly low foreign exchange reserves, high inflation and tough regulations imposed by the International Monetary Fund (IMF).
The cotton textile industry in Pakistan is finding it extremely difficult to procure necessary raw materials and is struggling to meet orders from international clients.
The shortage of foreign exchange reserves has resulted in thousands of shipping containers with raw materials, medical equipment and food items stuck at Karachi port.
The crisis is Pakistan’s cotton textile industry has put millions of workers in danger of losing their jobs.
According to textile associations in Pakistan, around 7 million workers have lost their jobs in recent months.
The devastating floods that had swept Pakistan last year had destroyed much of the cotton crop.
Pakistan’s State Bank has said that the country’s foreign exchange reserves dipped to $4.3 billion last week – the lowest since February 2014. Around $3 billion of that amount has been given by Saudi Arabia to shore up the forex reserves, but is not meant to be used.