Pakistani denim export to US hampered due to high production cost

Pakistan’s denim export to United States witnessed decline by 3.3 percent in 2016 also exports to European Union and Scandinavia countries has not increased due to high cost of manufacturing . It is becoming harder for exporter to compete with other countries that have cheap cost of production and government levies.

Chinese provide free electricity for first three years to new units while India was also provides incentives, according to leading exporter they cannot compete with until government provided incentives to them.

A prominent denim manufacturer and exporter, Dr Mirza Ikhtiar Baig said that a number of countries were providing zero-rated facility to their exporters, but in Pakistan tax agencies were charging a number of taxes such as export development surcharge and withholding tax which has lead to high in cost of production.

Pakistan was the second largest exporter of denim in the world after China. The ICAC said that the world trade in denim fabric averaged 670,000 tonnes per year. Other major exporters of denim were Turkey, India, and the United States (US).

Export of cotton denim fabrics from Pakistan stood at around 51 million square meters worth Rs 39 billion in 2016.

Turkish denim exports increased from 3.9 million meters to 46 million meters in five years. Chinese denim exports to United States grew up from 6.9 million meters to 87 million meters in the same period.

According to statistics of US office of textiles and apparels (OTEXA) it showed a nine percent rise in denim exports to the US in 2015-16.

Pakistan’s customers for denim are turning back and opting for other countries due to which the denim domestic manufacturers were facing hard pricing pressures due to capacity additions and cancellation of a few orders.

Denim is considered as the staple garment of the world as all of the people irrespective of their location, age, gender and status own a pair of jeans or two.

Europe represents the largest market worldwide. The market situation does not allow the global players in the denim to increase consumer prices and therefore they have to absorb the price increases from denim fabric producers worldwide.

Global market for denim jeans is forecast to reach $64.2 billion by 2020, driven by increasing disposable incomes.