A look at Textiles and Apparel sector export

Engineering Post Report

Textiles and apparel sector occupies  a pivotal position in  in Pakistan’s economy having most intensive backward and forward linkages compared to any other  sector. It contributes approximately 60 per cent  in total exports  and 40 per cent  in industrial employment. Pakistan is the fifth largest  cotton producing country  with tremendous  potential for further improvement in its share in the world.

According to available figures during July-March FY2023, exports of textile group witnessed a decline of 12.4 per cent and reached US $ 12.5 billion compared to US $ 14.2 during the corresponding period.

Textile sector faced multiple  issues including  energy shortages, high electricity tariffs,  elevated financing  costs, and global slowdown. Moreover, the devastating flood had also  destroyed the cotton crop which posed severe challenges for the industry.. The zero-COVID-19 policy in China was providing more opportunity for other economies  to seize the exports share. Bangladesh grabbed this opportunity with both hands. However, in Pakistan the domestic economic  issues were creating in exploiting this opportunity. The other problem was of the turnaround time of exports. Raw material was being imported, processed and re-exported.  The turnaround time in Pakistan was 5 to 6 months higher than in Bangladesh which was just 1 to 2 months.

According to U.S. Agriculture Department ‘s “Cotton: World Markets and Trade ” report, the global  cotton production  in 2022-23 was up to 116.5 million cotton bales and this has been attributed to higher production in China, Mexico, and Uzbekistan. Consumption was lowered more than 500,000 bales to 109.6 million and this was attributed  to lower use in Bangladesh. The world’s three largest consumers–China, India and Pakistan were forecast to account  for more than half of the global increase. Of the top ten  consuming countries, all  were expected to have higher use . After significant reduction  for India, Pakistan, and Bangladesh in the previous year, a general easing of financial pressures  and greater supplies were expected to support consumption.

Pakistan’s textile sector was currently experiencing a shortage of raw material  and unavailability  of foreign currency for the import of essential machinery, which is hindering production. In that backdrop, many textile firms had suspended  their operations, therefore, exports are most likely to remain under pressure until the  situation was normalized.

 In case of home textiles, bed wear decreased both  in quality and value by 23.3 percent and 17.0 percent respectively,  whereas towels exports also decreased  in both quantity and value by 13.2 percent and 9.1 percent in July-March FY2023. This unsatisfactory performance of towel exports  has been attributed  to limited access to technology, ineffective image building  and brand-development strategies.

Moreover,  towel industry is labour intensive, but scarcity of skilled labour  obstructed  exports growth in terms of quality, productivity and value addition. Knitwear exports grew  by 210.6 percent in quality, despite  a decline of 9.1 percent  in value during July-March FY2023. The exports of readymade garments increased in quantity by as much as 56.8 percent, however, its  value declined by 7.2 percent during the  period under report. The exports of intermediate commodities like cotton yarn witnessed a decline in both quantity  and value by  28.4 percent and 36.9 percent respectively during  the same period i.e. July 2022-March 2023.