Pakistan textile export declining at an alarming level

Pakistan Readymade Garments Manufacturers and Exporters Association (Prgmea) Chief Coordinator Ijaz A Khokhar urged the prime minister to intervene and frame a policy for a reduction in input costs, otherwise industrial units would not only close down, but millions of workers would also lose their jobs. The government need to address the problems of the value added textile industry sector on an urgent basis as there is a sharp drop seen in the current exports of textile and clothing during the first four month (July-October) of 2015 which may widen further in the next quarter.

The prime minister had committed to hold meeting with the export-oriented industries on a quarterly basis but no such meetings have taken place so far, Khokhar said.

On a monthly basis, exports dropped 10.63% to $1.051 billion in October compared to $1.176 billion in the same month last year. This is because of the fact that the value added textile sector is burdened with multiple taxes with high cost of inputs, tariffs of gas, electricity, raw material, etc, and is further harassed due to short supply of all these most essential utilities.

The government has increased the sales tax from 2% to 3% in the budget, which led to piling up of exporter’s refunds with the tax department. The government has also imposed 10% regulatory duty on yarn imports from India, mostly used by knitwear and woven apparel segments, to further increase the cost of doing business. Thus, price of domestically produced yarn increased manifold.

According to Pakistan Knitwear and Sweater Exporters Association North Zone chairman, Shahzad Azam Khan, observation the country will face a drastic decline in its export following the attacks on France. The exports have dropped by 10.63% to $1.051 billion monthly in October 2015 from $1.176 billion in the same month last year in spite of GSP plus status granted to Pakistan.

Quoting latest figures, he said that exports of value-added textile sector, after increasing for three consecutive months, also witnessed a negative growth due to harsh decisions against the value-added sector.

The sector exports had grown by 3% in July-Sept 2015-16. But during October 2015, readymade garments exports fell by 0.36%, knitwear 9.5% and bedwear by 8.92%. The textile exports of Pakistan got a boost of 13% due to import duty concessions under the European Union’s (EU) Generalised System of Preferences (GSP) scheme in the outgoing fiscal year.

It is observed that the value-added textile sector is not against spinning sector but it wants that whole textile chain be safeguarded because the sector has a tough competition in garments with regional competitors like Bangladesh, China and India.

Shahzad Azam suggested that import of yarn should be totally tax-free besides the imports of garments and unstitched clothes should be banned, so that the local industry could be boosted. When Pakistan was granted GSP Plus status by the EU the Indian government immediately announced incentives for its exporters to compete Pakistan. And again the Indian government announced rebate for its yarn exporters when Pakistan imposed additional 10 percent duty on import of yarn from the neighbouring country.

Also demanded the liberal import policy for raw materials for re-export like duty-free import of fabrics and accessories same as Bangladesh.

According to PRGMEA NZ Chairman Sohail Sheikh, besides improving law and order, and providing non-stop gas and electricity supply, the government would have to relax import policy to empower value-added textile industry to get the maximum benefit of GSP Plus status, as the country had no raw material except cotton.

The bleak exports figures clearly indicate that the country’s value-added textiles are falling to an alarming level.