TEXTILE EXPORTS OF PAKISTAN BY FARYAL FAROOQ & SABAHAT HUSSAIN

Overview The Pakistan textile industry contributes more than 60 % to the country’s total exports, which amounts to around $5.2 billion. The industry contributes around 46% to the total output produced in the country. In Asia, Pakistan is the 8th largest exporter of textile products. The contribution of this industry to the total GDP is 8.5%. It provides employment to 38% of the work force in the country, which amounts to a figure of 15 million.

Major Textile Industries Blinds, textile Bags or sacks, textile BlanketsCanvas goodsCordage Elasticised fabrics Fabrics, textile Felt (except floor coverings) Glass fibre fabrics Household linen Lace Narrow fabrics Netting, textile Piece-goods Rope (except wire rope) Sail clothSewing thread Soft furnishings StringTarpaulinsTentsTextiles n.e.c.ThreadTowels Trimmings, textile Yarns

Pakistan’s textile industry emphasis is on the spinning activity. Major portion of yarn produced is exported rather than utilizing large part of it for producing high value-added products like fabrics, or garments. This is an important structural weakness of our textile industry. This yarn imported by countries like Japan, Hong Kong and South Korea who have well flourished in this sector; convert it into high value added products and fetch much higher prices in the world market.

CURRENT TEXTILE EXPORTS Textile exports during January 2010 were recorded at $ 929,596 million as against the exports of $830,990 million registered during December 2009, showing an increase of %. The share of textile exports in total exports of the country shrunk to 55 % so far in the current financial year from well above 60% in the past years.

CATEGORYINCREASE 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 COTTON24.4% CARDED COTTON50.42% COTTON YARN7.64%

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 In this financial year, a total export target set at $18.6 billion and an import target of $28 billion, leaves behind a deficit of $9.4 billion. To meet the challenge of the future, Pakistan had set a textile export target of $14.5 billion by That pre-supposes an investment in the textile industry of $6 billion spread over three years to modernise and expand the industry.

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, % 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 Greater emphasis on value added products Use of better technology, upgrade machinery. Provision of training to the low skilled workers. Exploit new markets with provision of new and better products. Government policy to support the private sector in its efforts to modernise itself, increase the productivity and competitiveness of textile products