Sialkot’s Surgical Instrument Industry: History and Structure

Sialkot, a city in Punjab province in north-east Pakistan, is one of the best-known centres of surgical instrument making in the world. Instruments made there are used in hospitals across Europe and North America, often under the brand of a foreign distributor. This article explains how the industry started, how the cluster is organised today, and what pressures it faces. Figures are taken from the sources listed at the end. Where sources disagree, both figures are given.

How the industry started

Sialkot had a metalworking tradition before it made medical instruments. Wikipedia’s article on the city, drawing on published histories, says Sialkot was first noted as a centre of metalwork in the 1890s, and that its link with surgical instruments came from the need to repair, and then manufacture, instruments for a nearby mission hospital. By the 1920s, instruments made in Sialkot were being used across British India, and the Second World War increased demand further.

The Ethical Trading Initiative (ETI) and the Pakistan Institute of Labour Education and Research (PILER), in a study of the sector based on fieldwork in 2019, describe the cluster as starting as a cottage industry built on family and social networks. Skills passed from one generation to the next, and businesses were handed down within families. The same report says the export trade is said to have grown out of historical relationships between Sialkot’s family firms and family-run, skill-based businesses in Tuttlingen, Germany. The Trade Development Authority of Pakistan (TDAP) describes the industry as having a history of more than 100 years.

How big is it?

There is no single official count of companies or workers, and published estimates vary. Commonly cited figures include:

• Companies: TDAP’s sector brochure refers to over 2,500 companies. A 2018 diagnostic study by the Cluster Development Initiative (run by UNIDO and the Punjab Small Industries Corporation), quoted in the ETI report, identified 3,600 surgical manufacturing units.
• Products: TDAP and the ETI report both refer to around 10,000 different types of instrument. TDAP adds that company catalogues in the cluster list up to 40,000 distinct products.
• Employment: TDAP and the ETI report give 100,000 to 150,000 people in direct employment, with indirect employment estimated at 300,000 to 400,000 (ETI) or 350,000 to 400,000 (TDAP). Arab News, in January 2026, gave an estimate of 300,000 workers.
• Exports: According to the Surgical Instruments Manufacturers Association of Pakistan (SIMAP), as reported by Arab News, exports rose from about US$420 million in 2021 to nearly US$492 million in 2024, then fell to about US$445 million in 2025. A government statement reported by the Associated Press of Pakistan (APP) put 2024 exports at about US$449 million. The APP report also says Sialkot accounts for around 90 percent of Pakistan’s activity in the category.

Most output is exported. TDAP’s brochure states that 95 percent of Sialkot’s products are sold internationally. Its Trade Map tables show the United States as the largest destination, followed by Germany and the United Kingdom.

How the cluster works

Sialkot’s industry is a classic industrial cluster: many firms in one place, each specialising in part of the work, linked by subcontracting and trade.

Three tiers of producers

The 2018 Cluster Development Initiative study, as summarised by ETI, divided the units into three groups:

Type	Number	Workers per unit	Share of production outsourced
Large firms	20	250 to 350	10 to 15%
Medium firms	50	50 to 250	40 to 50%
Small firms and vendors	3,530	10 to 50	70 to 80% of products use semi-finished parts from home workers or other subcontractors

The ETI report estimates that over 95 percent of production is outsourced to the informal sector of unregistered workshops and home-based workers. Newsweek Pakistan, reporting in 2015, said factories in Sialkot mostly source their steel from forges in the nearby city of Daska.

Who does what

In the production chain described by ETI, informal vendor workshops typically carry out forging, trimming, machining, grinding, polishing and milling. Formal factories more often keep die making, heat treatment and polishing, along with checking, cleaning, packing and administration. A single instrument may pass through several units, formal and informal, before it is finished. Traders and agents work across all tiers, taking specifications from buyers and placing orders with vendors.

Reusable and disposable lines

The ETI report estimates that about 60 percent of instruments made in Sialkot are disposable and 40 percent reusable. For reusable instruments, mostly imported high-grade steel is used and the product can involve up to 40 production processes. Disposable instruments use local, lower-grade stainless steel and about 20 processes.

Branding and the value chain

Few Sialkot companies sell under their own brand directly to hospitals. The ETI report found that branding usually happens in Europe or the United States after export, through intermediaries. It also notes that many products are routed through Germany and sold as “made in Germany”, which makes Pakistan’s real share of the world market hard to measure. This is one reason buyers should understand the difference between a manufacturer, a private-label brand and a distributor. Our guide to company roles in the instrument trade explains the terms.

Quality and regulation

Access to the US and European markets depends on meeting their regulatory and quality requirements. TDAP’s brochure notes that manufacturers need CE marking or FDA registration to export to the EU or US, in addition to registration with Pakistan’s Drug Regulatory Authority for most local sales.

Academic work has long used Sialkot as a case study. Khalid Nadvi of the Institute of Development Studies argued in 1997 that cheap labour alone does not explain the cluster’s success, and that clustering and joint action among firms helped it compete. In a 1999 paper in World Development, he examined how the cluster responded to growing international quality-assurance demands, arguing that meeting them required more cooperation between producers and their suppliers and subcontractors.

Labour standards

Reports by Swedwatch and the British Medical Association since 2007, along with press investigations, have documented poor working conditions and child labour in parts of the supply chain. The ETI report found some improvement in exporting factories but little visibility of the lower tiers where exploitation is known to occur. It also notes that in most cases the location of each manufacturing stage is not documented, which raises questions for quality assurance as well as labour rights. The report notes that some public buyers are now changing their tender specifications to include due diligence and the risk of child labour. If you source from the region, our guide on how to check a medical instrument supplier covers the questions to ask.

Current pressures

Recent reporting points to several challenges:

• Tax changes: SIMAP’s chairman told Arab News in 2026 that the move from the Final Tax Regime to the National Tax Regime in 2024 was particularly damaging for family-run workshops.
• Costs and skills: exporters cite rising energy costs and an ageing workforce. The ETI report also describes the work as dirty and dangerous and increasingly unpopular as a profession.
• Competition: Arab News names the Tuttlingen cluster in Germany and producers in Malaysia, Hungary, Poland and China as rivals.
• Infrastructure: a planned dedicated industrial zone, “Surgical City”, was reported as stalled in court.

In response, APP reports a planned Rs 2.8 billion government workforce programme covering skills such as CNC machining, forging, grinding and polishing, electropolishing, passivation, quality control, and ISO 13485 quality management, with a long-term sector export target of US$2 billion by 2039.

Finding Sialkot manufacturers

Our directory lists medical instrument manufacturers in Sialkot and other companies in Pakistan. Our article on surgical instrument manufacturers in Pakistan profiles some of the established names. Pakistani producers also exhibit at domestic events such as Healthcare Expo Karachi, as well as at international fairs. Manufacturers in Sialkot that are not yet listed can apply for a listing.

Sources

• Trade Development Authority of Pakistan (TDAP): Surgical Instruments sector brochure
• Ethical Trading Initiative and PILER: Labour standards in Pakistan’s surgical instruments sector, a synthesis report
• Arab News: “Pakistan’s surgical exports slide as tax overhaul, rising costs squeeze Sialkot manufacturers”, Waseem Abbasi, 28 January 2026
• Associated Press of Pakistan: “Govt plans Rs 2.8 bln initiative to modernise Sialkot surgical instruments sector”
• Nadvi, K. (1997) The Cutting Edge: Collective Efficiency and International Competitiveness in Pakistan, IDS Discussion Paper 360
• Nadvi, K. (1999) “Collective efficiency and collective failure: the response of the Sialkot surgical instrument cluster to global quality pressures”, World Development 27(9): 1605–1626
• Newsweek Pakistan: “Sialkot’s Sweatshop Scalpels”, Louise Tickle, January 2015
• British Medical Association: Healthier procurement, 2015
• Wikipedia: Sialkot