Textile exports tumble 4.2% in July-August

Tag : Cotton Textile Materials

Textile exports tumble 4.2% in July-August
* Share of textiles in total exports decreased to 50.4% from 62.6%

By Sajid Chaudhry

ISLAMABAD: Despite enjoying subsidies worth Rs 19 billion, theshare of textile exports in the total exports of the country hasdecreased to 50.4 percent from 62.6 percent, during the July-Augustperiod of the current fiscal year.

The industry has not been able to reap the benefits arising out ofthe depreciation of the rupee by 25 percent, and textile exportshave registered a negative growth of 4.2 percent in the periodunder review.

However, without any government support, the share of non-textileexports have increased to 49.6 percent from 37.4 percent, accordingthe trade analysis presented before the Economic CoordinationCommittee of the Cabinet.

The total textile sector exports during July-August period amountedto $1.759 billion as against $1.836 billion in the same period ofthe last fiscal year, projecting an absolute reduction of $77.2million or 4.2 percent. The share of non-textile exports in thetotal exports of the country have increased to $1.730 billion inthe July-Aug period of 2008-09 in comparison with $1.009 billion inthe corresponding period in the last fiscal year, depicting anincrease of 57.4 percent.

Despite enjoying Rs 19 billion research and development support,the local textile sector has not been able to develop itscapacities and product development and meet internationalchallenges.

The reliance of the local textile sector on textile quotas, dutydrawback, refund and rebate culture has had a negative impact andits inefficiencies have exposed its capacity in the post-quota era.

Exports of food group have increased by a good margin of 39.9percent during the July-August period of the current fiscal yearwith total exports of $500.8 million as against $300.2 million inthe same period of the last fiscal year.

Other manufacturing group exports have also witnessed an increaseof 22.8 percent during the period under review with total exportsof $645.7 million as compared to exports worth $519.6 million inthe July-Aug period in 2007-08. Normally, depreciation of thecurrency helps boost exports in any country but those courtiers whoare mostly dependant on imported raw materials usually get littlebenefit from it.

If the share of imported raw materials used in export orientedindustries is lower than the ratio of depreciation, the countrywould benefit in terms of increased exports, an official of theMinistry of Finance said. The larger share of imported rawmaterials is used in export oriented industries the lesser benefitswould arise in a country where depreciation in currency is seen,he added.

In Pakistan, the textile sector commonly uses the locally producedcotton, yarn and raw materials and relies less on imports, but eventhan it has not been able to increase its exports at par with thelast fiscal year. Experts in the government also argue that utilityprices like gas, electricity and petroleum products have increasedand are having a negative impact on all export-oriented industries.Even than, exports of non-textile sector and manufacturing sectorare growing by 22.8 percent and textile exports have witnessed adecline of 4.2 percent in the July-Aug period.

The rupee witnessed a downslide soon after the Pakistan PeoplesParty-led government took charge of the affairs of the country. Itdepreciated from Rs 62 a dollar to Rs 78 a dollar during the lastfew months leaving export-oriented industries with no option toimport or buy imported raw materials at higher costs.

In the recent past, the countrys exports have been witnessingmarginal growth and imports have been registering sky rocketingincrease, which has created balance of payment problems for thecountry. Availability of locally produced industrial raw materialswould be the key to enhance countrys exports in future as theoverall inflation and depreciation of rupee and rising prices offuel would be limiting growth in exports, the official said.
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