Rising Costs and Policy Gaps Threaten Pakistan’s Hosiery Sector
Iftikhar Ahmed
Faisalabad: Pakistan’s hosiery industry, a backbone of the national economy, has long been a significant contributor to textile exports and job creation. Known for its production and export of quality knitwear, this sector has been generating millions of dollars in foreign exchange each year.
Despite its history of success, it now faces numerous challenges, ranging from fluctuating raw material prices to shifting economic policies, which have hampered its growth and global competitiveness.
Today, the hosiery sector grapples with a mix of economic, infrastructural, compliance, and policy issues. Industry experts argue that concrete action is needed to restore its competitiveness on the world stage.
Muhammad Akram Khan, Manager of a local hosiery unit, highlighted the threats posed by economic and political instability, raw material shortages, and fierce global competition.
“Our SMEs are under pressure,” he said, urging for policy reforms, technological upgrades, and strategic branding to address the hurdles. “We can boost hosiery exports and solidify our position in the global market if we tackle these challenges head-on.”
Technocrat Dr Muhammad Afzal pointed out the inconsistent political and economic policies as the root cause of many of the sector’s problems.
“Inflation, fluctuating exchange rates, and rising production costs severely impact the competitiveness of Pakistani hosiery,” he explained. Additionally, the devaluation of the Pakistani rupee has increased the cost of importing essential raw materials like synthetic fibers, dyes, and machinery.
Energy costs have also been a significant concern, with the hosiery sector being highly energy-intensive. The reliance on an uninterrupted power supply for critical processes like knitting, dyeing, and finishing makes expensive electricity a severe hindrance to profitability.
Dr Afzal further stressed the need for high-quality raw materials, which remain a challenge despite Pakistan’s significant cotton production.
The sector frequently depends on imports for fine yarns, synthetic fibers, and specialized materials, which raises costs and creates supply chain disruptions due to shipping delays and fluctuating international prices.
Another major roadblock, according to Dr Afzal, is outdated manufacturing practices that hinder the ability to meet global quality standards. Pakistan’s lack of modern spinning and dyeing facilities affects the production of high-quality products, making it difficult for the country to compete in the international market.
Compliance with international standards, including environmental regulations, labor laws, and quality certifications, is another pressing challenge.
Dr Afzal emphasized that meeting these standards requires substantial financial and technical investment, which many SMEs cannot afford. This leaves them at a disadvantage compared to competitors who have more modern facilities and better awareness of global compliance norms.
Pakistan’s hosiery industry also faces stiff competition from neighboring giants like India, Bangladesh, and China. To regain its competitive edge, Dr Afzal called for increased investment in Research and Development (R&D) and modernizing design and manufacturing processes.
He also recommended focusing on eco-friendly production technologies to appeal to international buyers increasingly concerned with sustainability.
Hazar Khan, Senior Vice Chairman of the Pakistan Hosiery Manufacturers & Exporters Association (PHMA) North Zone, pointed to “struck-up refunds” as one of the industry’s most pressing issues.
However, he also expressed optimism about government measures to revive the industrial sector. “Releasing pending refunds would provide SMEs with a much-needed boost and allow them to expand exports despite the tough international market conditions,” he said.
Khan urged for streamlined export procedures and better regulatory frameworks, which he believes would strengthen Pakistan’s position in the global hosiery market. “A versatile, strategic approach is necessary to tackle the challenges and help our industry thrive,” he noted.
Despite these challenges, there’s a silver lining. Recent export figures for the hosiery sector show a 16.49% increase in knitwear exports and a 22.48 percent rise in ready-made garments during the July-December 2024 period compared to the same period last year.
This growth suggests that the sector still holds immense potential, provided its challenges are effectively addressed.
Khan advised manufacturers to invest in modern machinery and automation to improve efficiency and product quality.
“Incentives for green production and adopting eco-friendly manufacturing practices could help align our exporters with global trends,” he added.
With its immense potential for growth, job creation, and foreign exchange earnings, Pakistan’s hosiery industry stands at a critical juncture.
A stable business environment, competitive pricing, and strategic investments in technology could unlock the sector’s true potential, ensuring its place as a key player in the global textile market.
