Pakistan textile, clothing export decline during first 11 month of current FY

Pakistan’s textile and clothing exports witnessed decline during the July-May period of 2016-17, as per data released by the Pakistan Bureau of Statistics on Tuesday. The decline in export proceeds was evident in rupee terms. Overall export proceeds in July-May were down 3.13pc to $18.540bn.

During the first 11 months of the current fiscal year textile and clothing exports decline 1.98 percent year-on-year to $11.24 mainly due to lower proceeds from raw material and low value-added products, such as cotton yarn and fabrics.

On a month-on-month basis, the export proceeds dropped 12.24pc in May negating the government’s claim of reviving the growth in the sector despite offering huge subsidies.

Product-wise details show exports of ready-made garments rose 4.15pc while those of knitwear dropped 1.85pc in July-May. Exports of bedwear edged up 3.22pc, while those of towels fell 4.77pc.

In primary commodities, exports of cotton yarn witnessed a year-on-year decline of 3.64pc while those of cotton cloth and yarn (other than cotton) dropped 5.81pc and 27.32pc, respectively.

Exports of made-up articles, excluding towels, dropped 0.45pc and those of tents, canvas and tarpaulin grew 52.85pc. Proceeds from art, silk and synthetic textile exports declined 33pc while exports of raw cotton also recorded a year-on-year decline of 47.14pc.

Exports of value-added products grew in terms of both value and quantity during the July-May period.

The preferential access to the European Union under the GSP+ scheme hasn’t boosted proceeds due to a slump in demand.

Last year, the government announced a textile policy that gave a 4pc rebate on the exports of readymade garments on a 10pc incremental increase over the preceding year, 2pc on home-textiles and 1pc on fabric. No support was announced on raw material or yarn exports.

Jan 15 onwards, the government has not only increased the rebate to 7pc for readymade garments, but also allowed cash support of 4pc on yarn and grey cloth under the Rs180bn package announced by the Prime minister.

Out of the total allocations, an amount of RS107.5bn was allocated to textiles sector – Rs87.5bn for drawbacks and Rs20bn for withdrawal of duties/taxes on import of cotton and machinery. Moreover, an amount of Rs12.5bn was the annual allocation for drawbacks on export of non-textile value added sectors.

The export finance rate is currently at 3pc, which is the lowest in a decade. Spinning and ginning sector have been included in the long term financing facility.
The sales tax zero-rating regime for the five export sector was continued in the fiscal year 2017-18.