Pakistan’s textile industry on the brink of collapse, millions of workers unemployed

For Ashraf Ali, a laborer working in a textile factory in Pakistan’s ‘textile hub’ Faisalabad, losing his job is like the destruction of his entire life.

Ali, 42, a father of seven, said, “Due to the shortage of cotton in the country, I was fired from my job at Satara Textiles, Faisalabad. I had given 24 years of my life to this company and it was very sad and sad for me to be fired.”

Last year’s floods destroyed a large part of the cotton crop. The floods killed more than 1,700 people and affected more than 33 million, but also caused billions of dollars in financial losses and dealt a severe blow to the country’s economy.

Pakistan is one of the major textile producers in the world. Its textile exports were estimated at $19.3 billion or €17.8 billion in 2021, accounting for more than half of the country’s total exports. Many of Pakistan’s small textile mills and ‘manufacturing units’, which produce bed sheets, towels and denim for consumers in Europe and the US, have now closed due to a shortage of cotton. Above all, the industry has also had to contend with recent tax hikes. The industry has to face these challenges at a time when the economic situation in Pakistan is very serious.

The country is struggling for its economic survival due to the tough program of the International Monetary Fund on the one hand and inflation and dwindling currency reserves on the other. In such a situation, due to the restrictions imposed by the Islamabad government, the textile industry is not able to procure the necessary raw materials and consequently is unable to fulfill the international orders.

Due to dwindling foreign exchange reserves, thousands of containers of raw materials, medical equipment and food items are stranded at Karachi port. Pakistan’s foreign exchange reserves fell to $4.3 billion last week, their lowest level since February 2014, according to the State Bank. Islamabad is hoping to break the deadlock with the IMF and negotiate a $1.1 billion loan release that has been pending since September.

Farhan Bukhari, an economic analyst, told DW, “The government should immediately resolve the impasse with the IMF to end economic uncertainty, and resolve import and debt issues.” Therefore, discussion with textile producers is also necessary.

Meanwhile, Muhammad Amjad Khawaja, who belongs to Pakistan Hosiery Manufacturers and Exporters Association in Faisalabad, described the decline of the textile industry as a result of political tension. Speaking to DW, Khawaja said, “Political instability in the country is hurting business and economy a lot. Amid rising political tension in the country, there has been a lack of confidence in the business sector and consumers are feeling insecure.”

Last month, All Pakistan Textile Mills Association (APTMA) Aptma demanded Prime Minister Shehbaz Sharif’s intervention in these matters. Meanwhile, Aptma patron Gohar Ijaz wrote in a letter, “A large number of jobs have already been lost and if effective measures are taken immediately, the remaining jobs will not remain.”

Gohar Ejaz has also written a letter to the US ambassador in Islamabad requesting him to arrange a loan of $2 billion for cotton import to Pakistan. Ejaz urged Washington to announce concessional loans for Pakistan’s textile industry.