Pakistan is stuck in cotton while the world has moved on

A founder Muzamil had been chasing for over a year

The episode opens with Muzamil saying out loud what he usually leaves implicit. Mussadiq Zulqarnain is someone he has been trying to get on the show for more than a year. The booking kept slipping. He was, he admits, nervous about whether it would happen at all. The framing matters because of the broader argument he makes in his introduction: Pakistan’s young people grow up looking at Elon Musk and Bill Gates because the country has a bad relationship with money and therefore a bad relationship with its own industrialists. The local builders, the ones who actually built something at scale, are not the people the next generation looks up to. Mussadiq is, in Muzamil’s read, exactly the kind of founder a young Pakistani should be studying.

Mussadiq begins by correcting him gently. He is not the CEO any more. He is the chairman of the board. And he wants the credit spread before they go any further. “I never think I have done anything alone,” he says. “We started in ‘92. Since then we have either established or acquired twenty-one organisations all over the world. Eighteen of them are still working and thriving, including two not-for-profits.” Interloop, he wants the audience to know, is not just a sock company. There is a holding group — Interloop Holdings — that runs the largest corporate dairy farm in Pakistan, a Turkish dairy joint venture exporting cheese and butter, a packaging and printing concern serving multinationals, Momentum Logistics (the sole authorised distributor for Samsung parts in the country), an IT company called Octane Digital that recently acquired Kendrill’s data and cloud business, and two healthcare joint ventures with Shifa International, including a 350-bed tertiary hospital coming up in Faisalabad. He demerged the holding from Interloop Limited, he explains, because investors should not have to guess what they are buying.

9.35 million rupees, a peephole, and the first French order

The origin story is unusually specific. Mussadiq trained as a mechanical engineer and was working at Sui Northern Gas Pipelines — at the time, one of two pay-master employers in Pakistan, alongside PIA. His starting salary was 2,300 rupees a month against the government engineer’s grade-17 pay of 1,600 rupees, and the money “would not finish.” He used to take overseas trips every year on those savings.

Two things shifted him out. His younger brother — seven years his junior, an Oxford industrial management graduate — came back from abroad with a friend who insisted that computerised sock-knitting machines were so new in Pakistan that, in Mussadiq’s retelling, “you would push a button at the top, feed yarn into it, and dollars would come out the bottom.” His mother, who had raised him and his siblings single-handedly after his grandfather’s death in 1968, asked him to join his brother. The second pressure was political. Mussadiq had led an engineers’ association at Sui Northern that successfully pushed for engineers-only promotions above a certain grade, and the non-engineer management was, in his words, “respectful on the outside but bitter on the inside.” A separate political squeeze — his mother had been elected to the National Assembly on a reserved seat — meant a federal minister was looking for ways to pull him out of the country during a vote of no confidence. He refused. The pressure stayed.

So he took a year’s leave and then resigned. He, his brother, his family, and his brother’s friends together raised 9.35 million rupees — a number he repeats because he says he repeats it constantly. They bought one and a half acres of land in Faisalabad in 1992, under Nawaz Sharif’s industrial incentive scheme. They had no business experience. None of them had ever even been inside a sock-knitting factory. The way they got to see one is one of the better images in the conversation: “Their factory wall was on the road and there was a window in it. So on a holiday, when it was closed, we went and peeped through that window to see how the machines were laid out.”

Ten machines went in by November-December 1992. They had no orders. Mussadiq, his brother, and his brother’s friends sat outside the building eating citrus through the winter. The first orders arrived through the machine manufacturer, who brought a French customer to them. In May 1993, Interloop did its first export. “And we never looked back.”

Why customers stayed: salaries on time, shipments on time, the truth

Muzamil asks why those early customers became loyal. The answer is not what most founders would lead with. “Pricing was the last factor,” Mussadiq says. “It was the trust they established on us.” Salaries paid on time. Suppliers paid on time. Shipments on the date promised. And — the line that lands hardest — telling the customer the truth even when the truth was inconvenient.

He tells a small story to make the point. A customer once told him that there were strikes at Karachi port and shipments would be delayed. Mussadiq was stunned. There was no strike. There was no delay. The customer went quiet, then explained that his other Pakistani suppliers had told him there was. “So now you get the picture,” Mussadiq says. That, he insists, is what built the relationship.

The early growth then compounded through a single large branded customer who started growing “phenomenally.” Interloop had already imposed a rule on itself: no single customer would take more than twenty-five percent of capacity. So every time the customer asked for ten machines’ worth of output, Interloop installed forty. When they asked for forty, Interloop installed one hundred and sixty — and then went out and sold the rest. By 1995 the company opened a garments unit, Inkland Garments Limited, which Mussadiq describes as immediately successful. They closed it on purpose. “We closed a profitable company so we could focus on one thing and become prominent in it worldwide.” That is the discipline he wants the audience to register.

The world’s number one sock manufacturer

Muzamil asks where Interloop sits in the global rankings. Mussadiq does not hedge. “We are definitely number one.” Ahead of China. Ahead of Vietnam. Once current investments complete, Interloop will produce close to one billion pairs of socks a year between Pakistan, an associate plant in Sri Lanka, and a recently acquired subsidiary in China — “enough socks for one pair for the entire USA and entire Europe every year,” he says.

The group’s current five-year vision — Vision 25 — is to become a “full family clothing partner of choice.” Infants, kids, ladies, men. Interloop now runs a denim plant in Lahore (one of the world’s top seven green buildings, by one UK ranking), is ramping a 120 million dollar knitted apparel facility toward 45 million garments a year, makes four million seamless active-wear garments, spins 25 million kilos of yarn annually (much of it branded and blended, not just cotton), and consumes 70 to 80 percent of Pakistan’s available yarn dyeing capacity because it dyes for everyone else as well. There are two thousand contracted organic-cotton farmers. There is a regenerative cotton crop coming this year. There is a yarn called Loomshake made by blending banana-stem fibre with cotton, developed with Texas University, already in use by global denim and sock brands.

The cotton trap

The argument that runs underneath the rest of the conversation is Mussadiq’s quiet heresy: Pakistan’s identification with cotton has become a liability. “Cotton has been a wonderful fibre for us, but cotton has become our weakness,” he says. “It is not our strength, not because we are not producing enough cotton, but because the world is moving away from cotton, and we have got stuck in cotton.”

He walks through the consumer-side evidence. Formal wear is dying. Active wear has moved into the office. Outerwear is barely cotton at all. Generation Z and millennials buy differently from previous generations. Fast fashion has compressed product cycles from quarterly collections to weekly drops, and that compression has pushed every serious manufacturing geography toward man-made fibres and toward backward integration so they can shorten lead times. Bangladesh, he notes, used to import most of its fabric from Pakistan. It no longer does. Vietnam has gone so far down that path that it now exports surplus yarn. Pakistan, meanwhile, still defends a category — pure cotton — that the consumer is walking away from.

This bleeds into the import-substitution question. Muzamil asks whether vertical integration inside Pakistan can replace what Interloop imports. Mussadiq’s answer is yes and no. The cost of production has to be feasible. The scale has to exist. And — this is the deeper point — Pakistan has “almost land-locked” itself. The whole world’s textile geography trades with itself; Pakistan trades with very little around it. The argument culminates in a clarification Mussadiq says nobody in policy circles wants to hear. “We call all of this textile. This is not textiles. Vietnam’s textile exports are zero. Bangladesh’s textile exports are zero. Their exports are apparel and garments. They are two separate segments all over the world.” The WTO defines textiles as three things: yarn, fabric, and made-ups. Everything else is apparel. Pakistan, he says, has spent years arguing about the wrong category.

Why Bangladesh and Vietnam left Pakistan behind

Muzamil presses with numbers. Between 2014 and 2024, Bangladesh moved from roughly fourteen billion dollars of exports to forty-five. Vietnam from twenty-three to close to forty. Pakistan stayed put. Mussadiq accepts the framing and then unpacks it in layers.

Bangladesh had no other option. It mobilised its female workforce. It enjoyed LDC status and the duty-free access that came with it — to Europe, to Canada, to Japan, even to China long before Pakistan got there. There is no religious-extremism stigma attached to Bangladesh in foreign buyers’ minds. Buyers can fly into Dhaka direct from any major hub; flying into Pakistan still requires a connection through Doha. “These are non-trade barriers but they are barriers,” Mussadiq says. “We do not consider them important. They are very important.”

Vietnam was even more decisive. The country positioned itself as the receiving end of capital moving out of China. Mussadiq personally testified before the US International Trade Commission’s hearing on the China-shift question, and what came out of that testimony surprised him: ninety-five percent of garment-sector investment in Cambodia, and the bulk in Vietnam, is ethnic Chinese capital — from Singapore, Hong Kong, Taiwan, the mainland. The same dynamic is now playing out in Indonesia. “CPEC is wonderful,” he says, “but commercial interest does not follow geopolitics. It has to make sense. If it makes sense, not just Chinese, Americans, everyone will come here.”

Then the deeper diagnosis. “Look at Pakistan’s seventy-seven-year history. A lot of FDI has come to Pakistan. A lot more could have come. Almost all of it is market-seeking. Almost none of it is efficiency-seeking.” Market-seeking FDI extracts dividends and royalties within two or three years. Efficiency-seeking FDI builds a manufacturing base that exports. The first is what Pakistan got. The second is what Bangladesh and Vietnam got. That, in his telling, is the whole story.

Energy, IPPs, and the politics of captive power

Muzamil pivots to power costs. The headline complaint from Pakistan’s textile lobby is that electricity in Pakistan is sixty-five to seventy rupees a unit while in neighbouring countries it is seventeen or eighteen. Mussadiq agrees power matters — twelve to fifteen percent of value-added textile cost, much more in spinning and weaving — but refuses to make it the whole story. He tells a quieter, more damning fact. Interloop is being asked by customers to explore production in Egypt. The team visited recently. Power there is available at six cents per kilowatt-hour. “How would somebody paying fifteen, sixteen cents compete with that?”

His prescription is precise. He is not asking for subsidy. He is asking the country to decide what its priority actually is. If exports are the priority, set them up to win. If they are not the priority, say so. “Tell us — we will go and do something else.”

On IPPs he is even-handed in a way that surprises Muzamil. Yes, some of those contracts were bad. Some could have been corrected. But Pakistan was hungry for investment at the time, and the jurisdiction for most of those agreements sits in London, so the legal exposure of unwinding them is real. The bigger losses, he argues, are elsewhere: in transmission capacity that cannot move cheap southern gas-fired electricity to northern industry; in DISCOs that do not collect; in the political subject-matter split between federal energy policy and provincial enforcement that makes it almost impossible to disconnect a non-paying feeder. The capacity payment problem, he says, is not an IPP problem. It is the consequence of Pakistan never industrialising at the scale its energy build assumed. “You are addressing the cancer by giving analgesics to reduce the pain.”

He defends captive power on the same grounds. Cogeneration plants running at fifty to sixty percent thermal efficiency on imported fuel are doing the country a favour, not extracting from it. Shutting them down to force load onto the grid would raise the country’s energy import bill, not lower it. The right move, he says, is to deregulate. Let Faisalabad’s industries source from whoever can deliver cheaper power. End the levelised tariff that makes a disciplined consumer in one city subsidise theft in another. “Why should a Faisalabad consumer pay for the losses of city X?”

The taxation distortion and a new social contract

Later in the discussion, Muzamil asks the broader question: why has Pakistan not industrialised? Mussadiq’s answer is the most coherent stretch of the episode. It is not nationalisation in the seventies. It is not stigma against wealth. It is, primarily, an incentive structure that has made undocumented money easier to keep than documented money, and unproductive investment safer than productive investment. “Savings erode in banks because of inflation. Stock markets are volatile. But a plot, even if you earned the money genuinely, will triple in five to ten years. So that is where genuine and ungenuine capital both end up.”

He wants the sales-tax chain digitised end to end. He wants the tax base widened rather than the same documented sectors loaded again. He wants subsidies — for fertiliser, for electricity, for BISP — pushed back onto provincial governments because agriculture and social protection are provincial subjects and the NFC has already given the provinces the fiscal space. He wants the federal government to stop trying to be in every business at once. He wants industrial incentives moved out of Lahore, Karachi and Islamabad and into Mianwali, Sakkhar, Khushab — anywhere that would slow the migration into the four cities that are already breaking. “People like us will take industries to those places if the incentive is right.”

He is sympathetic to the IMF in a way most Pakistani industrialists are not. “Pakistan’s transparency on its data and on its promises has eroded international institutions’ trust to some extent. So the IMF gives us conditions because of that loss of trust.” The way out, he argues, is a new social contract — agreed across political parties and power centres — that takes education, economy, and a minimum common agenda off the table of partisan fighting.

Lead time, India, and what Pakistan should actually export

Two smaller but important threads run through the back half. Lead time is the first. Muzamil asks whether US reshoring is a threat. Mussadiq is unworried about labour cost — the US is now a net service economy and is not coming back as an industrial giant. He is much more worried about lead time. “If something is thirty percent more expensive in country X but available on a four-day order, that will suit the buyer. Lead time reductions are a key area. Pakistan has the worst lead times in the world.”

The second is regional trade. He makes the case for normalising trade with India in unsentimental terms. Pakistan’s own population plus its border populations sum to three and a half billion people, with one point two billion of them middle class and up. “Pakistan is the most strategically positioned country in the world, in my opinion. We are next to that market. We get scared. Mexico has three and a half USAs next to it and that is the biggest market it has.” The discomfort with regional trade, he argues, is what keeps capital in plots and files instead of in industry.

When Muzamil asks what Pakistan should actually export beyond textiles, Mussadiq is direct. Stop building universities. University education is becoming redundant globally. Build skill-based education at scale. Train three million people a year for service-sector export: paramedics, nurses, chefs, IT workers. Send two million abroad. “You will forget the economy. It will become so undersupplied that exports will balloon.” Then double down on agro-based industry — Pakistan already exports butter and cheese; process more. Then religious and health tourism. “We could earn billions of dollars from the gurdwaras and mandirs and temples in Pakistan alone if we renovated them and let people in.”

Faisalabad, the missing middle, and a hopeful close

By the end of the conversation, Muzamil brings it home — literally — to Faisalabad. He describes a project he worked on with the World Bank a decade earlier, watching donkey carts deliver blue containers of water from the canal to households in a city that, in his words, should have been the crown jewel of Pakistani industrial development. Mussadiq does not disagree. Faisalabad had no middle class for a long time, no endowed civic class to push for the upgrades it needed. Many of the people who could have built that class moved to Lahore once the motorways made it easier. The city has changed — more chemical industry, more car manufacturing, more pharmaceuticals, mid-level professionals moving in — but not yet at the level he would like to see.

Muzamil asks the closing question he has been building toward. The sentiment in Pakistan in 2024 is, by his read, as negative as it has ever been. People do not want to hear that the future could be bright. What does Mussadiq see for the Pakistan of 2050?

The answer is the most personal in the conversation. “The proof of the pudding,” he says, “is that we had decided to invest three hundred million dollars in this country. One hundred and fifty has been done. The other hundred and fifty will be. We are not going to change it.” His view is that his generation has to wipe out before better decisions get made, and that the next generations will make them. The good news, he insists, does not get told. The Citizens Foundation runs two thousand schools and is putting fishermen’s children and water-bearers’ sons on full scholarships to top universities. Nobody sells that story because it does not sell. “Things are bad,” he says. “But they look five or six times worse than they are. Our youth is our biggest resource. If we improve our human capital index and give them opportunity, nobody can beat us.”

Muzamil closes with a softer challenge. India’s youth grow up looking at the Tatas and the Mittals. America’s youth grow up looking at Steve Jobs and Bill Gates. Pakistan’s businessmen, he says, are not in the limelight defining the narrative for the country’s young people. They have outsourced that job to politicians who are mobilisers, not problem-solvers. Mussadiq agrees, with one caveat. “You can speak out only if you don’t have any skeletons in the cupboard. That is part of why people stay quiet.” But on the principle he is fully with Muzamil. “We should project local success stories. We should talk about this openly. Criticism does not mean others are wrong. The purpose is to analyse our mistakes and try to improve.”

It is, in the end, the same discipline the founder brought to a one-and-a-half-acre plot in 1992 — say the truth, pay on time, ship on time, focus on one thing — applied to the country he has spent his life building in.