The textile industry has been hit by falling export trend. Most of the exporters seem to be nervous which has raised alarm bells for the country’s economic managers. The sharp decline in exports of the textile products, including cotton yarn, cloth, bed-sheets, home textiles, garments and hosiery, is a serious threat not only to textile industry, but also a blow to the country’s economy.

Unfortunately export of the textile products had declined by over 10% during the last quarter of the current fiscal year and it looked that it would further decline by 7% in coming months. The cost of doing business in Pakistan was on the higher side than the neighbouring countries like China, India, Bangladesh and Sri Lanka.
 
Recently, UNDP released Asia-Pacific Development Report 2006 which says that Pakistan fared badly in the region’s textile exports compared to Bangladesh— a non-cotton-producing country. Pakistan earned less ($5.39 billion) than Bangladesh ($6.99 billion) in 2005 through the export of textile and clothing, though it exported nearly 200 million kg more than Dhaka. India and China which are cotton-producing countries have a bigger share of the international market in terms of volume and are also earning far greater amounts of foreign exchange from their exports.

To improve the value addition capacity, textile industry sources claim that around Rs450 billion has been invested in modernization and improvement of production technology and textile machinery worth $4 billion was imported in the last four years.

Even after such a huge investment, textile exporters find themselves in a tough situation. They claim that the cost of doing business in Pakistan is too high. Most of them demand a cut in utility costs. They want the government to have a fresh look at gas and electricity rates. On the other hand, it seems that the textile industry is the most pampered industry getting rebates for R&D, swapping of high cost loans with subsidised credit and a range of other concessions.

In the post-quota regime, the era of concession is fast diminishing; global trade is swiftly marching towards a level playing field. Instead of relying on governmental concessions, the textile management needs a paradigm shift.

According to the Pakistan Cotton Fashion Apparel Manufacturers & Exporters Association (PCFA) the core issue was that the cost of doing business was going up all the time, as a result of which, Pakistan’s textile exporters were facing tough competition from neighbouring countries like India, China and Bangladesh

On the other hand President Rawalpindi Chamber of Commerce and Industry (RCCI) Dr Hassan Sarosh said that the basic factor of decline in exports was that during the last three years, the gas price had been increased by over 50%, mark-up on bank loans raised from 4% to 15% and all the cost inputs and spare parts, required in manufacturing of textiles from spinning to finishing, garments, home textile, had been increased from 15% to 35%.

The slump in demand for Pakistan’s textile products is feared when a recent survey in USA showed that 62 per cent of small businesses in America are looking forward to a strong holiday sales season. According to this survey, 68% of American small business will manage on line marketing and 20% are engaging additional manpower to cope with rising demand.

Clothing and apparels comes next after food and remains one of the biggest items on demand in the Christmas and New Year sales in big and small stores of US. Pakistan’s share will be minimal as China, India, Vietnam, Bangladesh have already made big inroads in the American market. Amidst these reports of expected rise in demand for textile products in USA and from Europe too, Pakistan’s textile exports in July-September 2006 slumped to $2.45 billion from $2.73 billion in same quarter a year ago. Except for yarn, the fall in the exports is virtually across the board.

As is the normal practice, the textile exports should start picking up in October with the new cotton crop trickling in about 350 textile mills and looms getting into operation to bring out cloth, towels etc., thus gearing up the entire textile chain. Pakistan, at present, holds the 8th position in textile exports in Asia. Experts are projecting to achieve an export target of $13 billion by the fiscal year 2006-07 from the present level of about $9.9 billion which appears to be an achievable target. Now textile industry expects some relief in energy cost particularly in the prices of gas consumed by the power generators installed in factories. The industry also expects same concessions in electricity charges.