Nearly 40% of Faisalabad's Power Looms Have Shut Down, Leaving 100,000 Jobless

Nearly 40% of power-loom units in Faisalabad and the towns around it have shut down, leaving more than 100,000 workers without jobs, according to industry figures reported this week — the clearest sign yet that Pakistan's largest power-loom hub is in genuine crisis rather than a seasonal slowdown.

The scale of the closures

Faisalabad, long known as Pakistan's textile hub, hosts the bulk of the country's power-loom capacity alongside allied industries like yarn sizing. Industry estimates put the toll at close to 40% of units in the city and adjoining towns going idle, with the job losses concentrated among workers who depend on looms running at or near capacity to earn a living. For a sector the Council of Loom Owners Association has described as central to the local economy, a closure rate at that scale represents one of the sharpest contractions power-loom owners have reported in recent memory.

Why owners blame Chinese imports

Loom owners point to cheaper Chinese yarn, grey cloth and finished textile products as the immediate cause of the squeeze. The complaint isn't simply that imported yarn is cheaper — it's that a meaningful share of it is allegedly entering the country under-invoiced, with its declared value understated to reduce the duty owed and undercut domestically produced yarn on price in a way legitimate imports wouldn't. The Council of Loom Owners Association has called for stronger Customs checks specifically to curb that practice, arguing that enforcement, not tariff policy alone, is the gap that needs closing.

That enforcement gap is not an abstract complaint. It sits alongside Pakistan's broader struggle to police under-invoicing and retail tax compliance, and the same enforcement squads tasked with catching smuggled and under-invoiced goods at the source are themselves operating in some of the country's most dangerous districts — two FBR enforcement officials were killed and their weapons seized in a Dera Ismail Khan shooting this week, a reminder that customs enforcement in Pakistan carries risks well beyond the paperwork.

The cost side of the squeeze

Cheaper imports are only half the story. Loom owners also cite Pakistan's electricity and gas tariffs — among the highest in the region for industrial users — and tax costs as structural burdens that leave domestic producers unable to compete even before accounting for under-invoiced competition. Pakistan's industrial tariff structure has been under review for months, including a NEPRA review of the industrial tariff package in October, but owners say relief has not reached the power-loom sector fast enough to prevent closures already underway.

Why this matters beyond Faisalabad

Textiles remain Pakistan's largest single export earner, and the sector's headline export figures — which held at roughly $18 billion for fiscal year 2025-26 — have so far looked resilient on paper. But that resilience sits uneasily next to a power-loom crisis unfolding at the lower, more labour-intensive end of the same supply chain. A sector that can post flat-to-positive export revenue while shedding 100,000 jobs at the loom-owner level is one where the pain is concentrated in small and mid-sized operators rather than the larger exporters whose output dominates the national trade figures — a gap that matters for anyone assessing how healthy Pakistan's textile economy actually is beneath the export headline.

What happens next

The Council of Loom Owners Association's push for stronger Customs enforcement against under-invoicing is likely to be the sector's central demand in the coming weeks, alongside continued pressure for industrial tariff relief. Whether either arrives quickly enough to slow the pace of closures remains the open question for a workforce that has already lost more than 100,000 jobs to a sector-wide downturn with no clear floor yet.

Build Better Pakistan's Economy Desk is tracking the power-loom sector and will update this piece as industry and government figures respond.