Pakistan’s Textile Industry

Perpetual Dependence on Preferential Treatment

Pakistan’s textile industry is once again seeking government intervention to safeguard its preferential access to the European Union under the GSP+ regime. In a letter dated October 22, 2026, the Pakistan Textile Council (PTC) urged Prime Minister Shehbaz Sharif to mobilize federal ministries and provincial governments to meet the EU’s requirements. While protecting export markets is a legitimate concern, the industry’s persistent dependence on government support raises a fundamental question, when will it learn to compete on merit rather than concessions?

For decades, Pakistan’s textile and clothing industry has benefited from cheap cotton, textile quotas and preferential market access under the GSP and GSP+ regimes. Yet, barring a few islands of excellence, much of the industry has failed to undertake adequate balancing, modernization and replacement (BMR), upgrade technology, improve quality standards and develop internationally competitive products. Its preference for exporting raw cotton, yarn and intermediate goods rather than moving decisively towards higher-value finished products reflects a persistent failure to capture greater value from the country’s resources.

Preferential access can provide breathing space, but it cannot substitute for productivity, innovation, compliance and efficient resource utilization. An industry that repeatedly seeks official intervention while neglecting structural weaknesses should not be surprised when competitors gain ground. Cheap inputs and tariff concessions may improve margins temporarily, but they cannot indefinitely compensate for inadequate investment, inconsistent quality and weak competitiveness.

The stakes are considerable. In FY2025-26, the EU-27 absorbed US$7.103 billion, or 39.5% of Pakistan’s textile and apparel exports. Yet sector exports to the bloc declined by 2%. Meanwhile, India is pursuing deeper trade integration with the EU, while Bangladesh is exploring closer trade ties. These developments expose Pakistan’s vulnerability to changing trade preferences.

The EU’s emphasis on human rights, labour standards, the rule of law and environmental protection must also be treated as more than bureaucratic hurdles. Compliance is integral to sustainable participation in modern global supply chains.

The government should pursue GSP+ retention through credible reforms, but the industry must reciprocate by investing in technology, skills, product development and value addition. Preferential access should be a bridge towards competitiveness, not a permanent crutch.

Pakistan cannot build a resilient export economy by repeatedly negotiating concessions while postponing the reforms needed to compete without them.