The headline is not the story
A sector that grew 0.3% looks like a sector standing still. But FY26 was not a normal year: Pakistan’s total exports fell 5.9% to $30.14 billion. In that context, a textile sector that grew at all grew against the current — and its share of a shrinking national export base rose to roughly 60%.
That is the framing point. Everything else in this analysis is about what changed inside the sector, which is where the useful signal sits.
What actually changed: composition
The sector’s export mix moved decisively toward finished goods:
| FY22 | FY26 | Change | |
|---|---|---|---|
| Value-added (Ch 61–63) | 77% of textile exports | 83.2% | +6.2pp |
| Raw materials and intermediates (Ch 50–60) | $4.498bn | $3.026bn | −32.7% |
Raw material and intermediate exports fell to $3.026 billion, the lowest in five years. Value-added exports rose 1.1% to $14.98 billion.
This is the direction a developing textile economy wants to move, and it is worth being precise about why. Exporting a tonne of raw cotton captures the value of growing it. Exporting a tonne of finished garments captures the value of growing it plus ginning, spinning, dyeing, knitting or weaving, cutting, sewing, finishing, testing and compliance. The employment and margin difference per tonne of fibre is large, and it is the difference between competing with other cotton growers and competing with other garment manufacturers.
For a buyer, this changes what Pakistan is for. A country moving out of fibre exports and into garment exports is becoming more relevant to brands and importers and less relevant to spinners. That is a meaningful shift in who should be looking at it.
Where the growth is, and where the decline is
The segment detail is more informative than the aggregate, because the sector is not moving uniformly.
Growing:
- Non-knit apparel (Ch 62): +3.9% to a record $4.295 billion. Men’s and women’s cotton trousers led. The report attributes this to higher-value demand and to improvements in product capability, range diversity and vertical integration. This is the sector’s clearest success: it is the segment that requires the most manufacturing capability and it is growing fastest.
- Home textiles and made-ups (Ch 63): +0.6% to $5.705 billion. Still the largest segment. Towels account for roughly $1 billion and cotton bed sheets around $503 million.
Flat or declining:
- Knitwear (Ch 61): −0.7% to $4.979 billion. Essentially flat, and worth watching: knitwear is a high-volume category where Pakistan has traditionally been strong, and marginal decline in a growing market implies share loss.
- Man-made fibres: sharply down. Man-made filaments fell 26.2%, man-made staple fibres 8.8%, knitted fabrics 20.7%.
The pattern is consistent: cotton-based, higher-value, vertically integrated categories are holding and growing; man-made fibre and intermediate categories are contracting. The sector’s competitive advantage is in cotton-rich finished goods, and its export performance is reflecting that.
The fibre problem underneath it all
The most consequential figure in the report is not an export figure at all.
Domestic cotton production is estimated at around 5.5 million bales, against a peak of 14.8 million bales in 2011-12. That is a decline of roughly 63%.
The report attributes the fall to heat stress and water shortages in the main cotton-growing areas. Whatever the cause, the structural consequence is unavoidable: the spinning and processing capacity built to consume a 14.8-million-bale crop still exists, and it is now being fed by imports.
Two implications follow.
First, provenance and manufacture have separated. “Made in Pakistan” and “made from Pakistani cotton” are no longer the same claim. A buyer who specifies Pakistani cotton as a sourcing requirement — for traceability, marketing or preferential treatment reasons — should expect that requirement to carry a cost and to require verification.
Second, the sector’s growth is exposed to fibre import economics. A garment export sector built on imported cotton is exposed to import costs, currency movement and logistics in a way that a self-supplied sector is not. That exposure sits underneath the otherwise encouraging growth in value-added exports.
The 20.7% decline in knitted fabric exports and the 26.2% decline in man-made filaments are worth reading alongside this. Intermediate categories are being consumed domestically rather than exported — which is what you would expect from a sector integrating forward, and is also what you would expect from a sector whose raw material supply is constrained.
Market concentration
| Destination | Value | Share |
|---|---|---|
| European Union | $7.103bn | 39.5% |
| United States | $4.853bn | 27.0% |
| United Kingdom | $1.730bn | 9.6% |
| China | $0.644bn | 3.6% |
| Bangladesh | $0.620bn | 3.4% |
Five destinations account for 83.1% of the sector’s textile and apparel exports. The report calls this concentration a weakness and recommends diversification into South America, Africa and the Far East while maintaining established markets. It also calls for continuity of EU GSP+ preferential access and additional trade agreements with the US and UK.
The concentration cuts both ways for a buyer. On one side, it means the sector’s capacity is oriented toward EU and US buyer expectations — sizing, compliance, documentation and testing regimes — which is helpful if you are such a buyer and a friction if you are not. On the other, it means the sector’s commercial behaviour tracks two demand cycles and one set of trade arrangements, and a change in either would move landed costs directly.
What this means for a sourcing decision
Three conclusions follow from the data, stated as interpretation rather than finding:
- Pakistan is a cotton-rich finished-goods answer. Woven bottoms, knitwear, home textiles and cotton shirting and trousers are where the capability and the growth both are. Categories dominated by man-made fibres are contracting and are a weaker fit.
- Fibre origin should be specified and verified. The domestic supply position makes “Pakistani cotton” a claim that requires evidence, not an assumption that follows from country of manufacture.
- Landed cost is the relevant comparison, not unit cost. Sea freight position and transit time to destination are identified in the report as constraints, and the export data shows the sector is oriented to Europe and North America. Unit price comparisons that ignore freight will mislead.
The constraints the report itself identifies — energy cost, taxation and refund delays, SME financing, freight, cotton supply — are not reasons to avoid the country. They are reasons to price it honestly and to qualify the specific facility rather than the sector.
What this report does not establish
It does not forecast. It does not compare Pakistan against Bangladesh, Vietnam or Turkey — that comparison is a separate exercise requiring data on the same basis for each country, and the framework for it is published at compare countries. It does not assess any individual manufacturer. And it does not verify the underlying customs data, because it did not have access to it: the figures are reproduced from a single annual report, which is the honest limit of what a secondary analysis can claim.