TEXTILE EXPORTS OF PAKISTAN

BY FARYAL FAROOQ & SABAHAT HUSSAIN

Overview

Major Textile Industries

CURRENT TEXTILE EXPORTS

CATEGORY INCREASE IN EXPORTS

COTTON CLOTH 10.26%

YARN(OTHER THAN COTTON YARN) 13.86%

KNITWEAR 12.48%

BEDWEAR 15.34%

TOWELS 4.7%

CANVAS TRAPULIN 6.93%

RAEDYMADE GARMENTS 25.39%

SILK & SYNTHETIC TEXTILE 9.03%

OTHER TEXTILE MATERIAL 22.03%

DECREASE IN EXPORTS

RAW COTTON 24.4%

CARDED COTTON 50.42%

COTTON YARN 7.64%

LOW COTTON PRODUCTION

• Mainly the textile exports comprise of cotton related items, due to low production of cotton it has suffered.

• From 14.5 million bales production has reduced to almost 11.5 million bales.

• This means initiatives for producing more raw material should be taken.

• Research has been done on use of Bt cotton to fill the gap.

USE OF Bt COTTON• Insects, disease, heat stress and drought present

the greatest impediments to accomplish desired yields and quality in cotton.

• Pakistan during the last two decades has also been trying to meet the standard of fiber traits desired by our textile industry.

• So far one immediate solution to improve cotton production can be solved by the adoption of Genetically Modified (GM) cotton - known as Bt Cotton, which has been grown successfully in many parts of world like USA, Australia, China, India;

PROBLEMS IN TEXTILE EXPORTS• Stagnant export of textile goods and whatever is being

exported in this category largely comprises of raw cotton, cotton yarn and low valued textile goods.

• The value-added sector, they pointed out is under intense pressure due to a host of domestic and international issues,

• The prolonged power outage, gas shortage, high financing cost and infrastructure problems are some of the major issues, which have been hampering the growth of the value-added textile sector.

• Also, the high tariffs on the textile goods in EU and US markets have given leverage to its competitors like Bangladesh and Vietnam to kick out Pakistani products from these lucrative and high-priced markets.

COMPETITION• The Pakistan textile industry is facing tough competition

from the Indian, Bangladeshi and Chinese textile industries• India performed better by 1% compared to Pakistan in case

of exports to EU. Exports to Japan declined by 7%. Pakistan exports yarn and fabric to Japan.

• In Japan the segment which uses these products is not able to cope with high production cost and has reduced imports.

• Pakistan's exports to Canada registered increase of 9%. India’s exports to Canada increased by 6%, which is 3% less than that of Pakistan.

• India recorded 16% hike in textile exports to Japan compared with 7% decline in Pakistan’s exports. India was able to capture some of the textile market in Japan which was previously with Pakistan.

EXPORT OUTLOOK 2010

Taxes on Exports

• Although there are no heavy taxes on textile exports after the abolition of sales tax on exports, there are a few small taxes like the 0.25% withholding tax, 0.25 export development fund levy, 0.75-1.25% income tax and the EBOI payments which total about three per cent.

• The government has been considering zero rated taxation for long but the CBR does not want exporters go off their clutches all together.

REMEDIES