Sources identified that the textiles and clothing sector has grown to be the single largest manufacturing sector in Pakistan. The Sector employs statistics showed, over 38 percent of the manufacturing labor force. Greater than US$5 billion of textile and garment machinery into Pakistan; has been imported in the last few years. The Textiles Sector is present, based almost completely on the private sector. Sources identified that the textile and clothing sector is the backbone of Pakistan’s economy and Pakistan’s role as one of the world’s leading cotton producers has offered the basis for the textile and clothing sector’s development.
| Export Of Pakistan Textiles (US$ millions) | |
|---|---|
| Details | 2021-22 (Jul-Mar) |
| Cotton & Cotton Textiles | 13890.824 |
| Synthetic Textiles | 343.591 |
| Sub-Total Textiles | 14234.415 |
| Wool & Woolen Textiles | 60.993 |
| Total Textiles | 14295.408 |
| Pakistan`s Total Exports | 23354.901 |
| Textile as %age of Export | 61.24% |
Statistics also showed that our country-Pakistan on annual basis has exported textile products valued at $19.33 billion during FY2021 making a record high. Pakistan exported textile products valued at $19.33 billion during FY2021 explaining a rise of 25.53 percent when compared with $15.4 billion in the preceding fiscal year. Since last year, the rebound in exports of textiles was the outcome of a series of incentives to support exporters to meet the problems in the wake of Covid-19 and disruption in supplies. Moreover, the government of Pakistan’s decision to keep businesses open during the lockdown offered an opportunity to secure orders diverted from economies under strict lockdown. For the last 5-years, the textile export data showed that volumetric textile exports are the primary driver with a double-digit increase in value-added items. Pakistan’s exports of merchandise, however, entered a pessimistic growth in July 2022 after 22 months when the economy recovered from the impact of Covid-19. Statistics also showed that the export proceeds declined 5.17 percent to $2.21 billion in the first month of the current fiscal year from $2.34 billion in the same month the previous year. On a month-on-month (MoM) basis, the export proceeds tumbled by 23.95 percent showing a downward trend in the export sector. On the other hand, World Bank’s Pakistan development update 2021 suggests that in order to maintain strong economic growth, experts recorded that the government of Pakistan needs to raise private investment and export greater as a key factor driving the trade imbalance is the falling export competitiveness. Statistics also identified that since the turn of the century, the share of exports in Gross Domestic Product (GDP) has been falling, from 16 percent in 1999 to 10 percent in 2020. According to the government of Pakistan statement, the textile sector weight has been reduced from 20.9 to 18.16 in QIM 2015-16 but still the highest among all sectors of LSM.
The Sector grew by 3.2 percent during July-March FY2022 as against 8.0 percent in the corresponding period the previous year. Major growth originated from woolen segment production with the highest surge of 38.9 percent in blankets, 27.9 percent growth in woolen & carpet yarn, and 19.1 percent in woolen & worsted cloth. Production of yarn and cloth showed marginal growth of 0.7 and 0.3 percent, respectively. Congruent production units, invariant capacity and elevated cotton prices owing to demand and supply gap disruptions have moderated the growth momentum of the cotton sector. The depreciation of the rupee restrained the production of jute, as most of the raw material is imported from Bangladesh. However, the surge in imports of textile machinery, growing demand for concessionary financing from textile companies and high exports of this sector explain a sizeable improvement in the textile sector. According to international sources, the long-term decline in exports as a share of GDP has implications for the country’s foreign exchange, jobs, and productivity growth. Therefore, confronting core problems that are necessary for the country to compete in worldwide markets is imperative for sustainable growth. Sources also identified that our country is already ranked 108 among 190 economies in the ease of doing business. With the raise in working capital levels and the interest rate, the cost of business has increased to unsustainable levels while the withdrawal of zero-rating sales tax and the implementation of a 17 percent general sales tax on the export-oriented sector add to the injury. Inefficient tax strategies inflate inventory and capital costs and also encourage the trade volume to rise outside the tax system resulting in a raise in fraud, smuggling and import of clothing. In examining the country’s persistent trade imbalance, the sources showed that the main factors that are hindering exports: are high effectual import tariff rates, limited accessibility of long-term financing for companies to enlarge the export capacity, poor provision of market intelligence services for exporters, and low productivity of Pakistani companies.
It is also said that the textile sector sustains its ranking as the single largest manufacturing sector in Pakistan, unluckily; indigenous manufacturing of its machinery could not develop along with the growth of the textile sector. Resultantly, demand for textile machinery still is almost completely met by worldwide imports. In 2016, SBP proclaimed LTFF to promote export-led industrial growth in Pakistan by offering subsidized financing for setting up export-oriented projects and modernizing plants & machinery. For a country like Pakistan, going through energy crises, with high costs and scarce resources it only makes sense that in order to raise productivity and ensure sustainable supply, the resource allocation should be such that the priority of gas supplied to dissimilar sectors of the economy should be such that productive sectors of the economy that add more value to GDP should be given preferential priority as such policy measures improve textile exports of Pakistan.