Textile exports Drops

Pakistan textile industry exports have dropped by $1.4 billion in 2015-16 after losing competitiveness on regional matrix, said industry sources.

Besides, they added, a financial impact of 10 percent in terms of incidentals and taxes on exports was also hitting it hard that might lead to a further drop in exports ahead in case no timely action is taken by the government.

On the regional competitiveness matrix, the electricity tariff for textile industry in Pakistan is 11 cents/kilowatt hour against 7 cents in Vietnam, 9 cents in Sri Lanka, 7.3 cents in Bangladesh, 8.5 cents in China and 9 cents in India.

On the gas tariff, it is $8/MMBTU in Pakistan against $4.5 in Vietnam, $3 in Bangladesh, $6 in China and $4.2 in India.

Similarly, on the side of minimum wage per month, it is $135 in Pakistan against $90 in Vietnam, $66 in Sri Lanka, $68 in Bangladesh, $200 in China and $90 in India.

So far as the percentage of currency change against the US dollar during December 2013 to December 2015 is concerned, Pakistan is the only where local currency has appreciated by 3 percent against a depreciation of 5.6 percent in Vietnam, 9.3 percent in Sri Lanka, 0.6 percent in Bangladesh, 5.1 percent in China and 8.1 percent in India.

Pakistan is also the only country in region where no significant investment promotion scheme or park has been announced in recent past with a meager technology up-gradation fund of 25 percent against the 100 percent in the region.

Pakistan is again the only country where the impact of duties, taxes and surcharges on exports is above 5 percent against less than one percent in Vietnam, Sri Lanka, Bangladesh and China while a zero surcharge in India.

Share of textile and clothing export in the world market has dropped to 1.5 percent in 2015 against 2.23 percent in 2005, which has become 3.7 percent in Vietnam in 2015 against 1.12 percent in 2005, 0.65 percent in Sri Lanka in 2015 against 0.62 percent in 2005, 3.7 percent in Bangladesh in 2015 against 1.6 percent in 2005, 38 percent in China in 2015 against 30 percent in 2011 and 5 percent in India in 2015 against 3.5 percent in 2011.

The textile industry circles have urged the government to withdraw 4 percent customs duty, 5 percent sales tax on import of cotton and remove duties and taxes on man-made fibre imports. It has also sought extension of 5 percent of DLTL to all textile exports from yarns to garments in order to overcome incidentals of taxes/levies/cess and various surcharges etc.

According to the industry circles, NEPRA determined electricity tariff for 2015-16 should be notified without any additional surcharges/innovative taxes and it should not be higher than Rs. 8/KWh in any case. So far as the natural gas/RLNG is concerned, they said it should be provided at regionally competitive rates and should not exceed $6/MMBTU.

Similarly, they have sought both tariff and non-tariff measures to curtail imports of synthetic yarns and fabrics entering into domestic commerce for end consumption. The indirect exports should be made eligible under the LTFF scheme to encourage local supply of basic textiles for value addition, they added.