Pakistan’s textile and clothing exports witnessed decline during the July-May period of 2016-17, as per data released by the Pakistan Bureau of Statistics recently.The decline in export proceeds was evident in rupee terms. Overall export proceeds in July-May were down 3.13 per cent to $18.540 bn. During the first 11 months of the current fiscal year textile and clothing exports decline 1.98 per cent year-on-year to $11.24 mainly due to lower proceeds from raw material and low value-added products, such as cotton yarn and fabrics.

On a month-on-month basis, the export proceeds dropped 12.24 per cent in May negating the government’s claim of reviving the growth in the sector despite offering huge subsidies. Product-wise details show exports of readymade garments rose 4.15 per cent while those of knitwear dropped 1.85 per cent in July-May. Exports of bedwear edged up 3.22 per cent, while those of towels fell 4.77 per cent. In primary commodities, exports of cotton yarn witnessed a year-on-year decline of 3.64 per cent while those of cotton cloth and yarn (other than cotton) dropped 5.81 per cent and 27.32 per cent, respectively. Exports of made-up articles, excluding towels, dropped 0.45 per cent and those of tents, canvas and tarpaulin grew 52.85 per cent. Proceeds from art, silk and synthetic textile exports declined 33 per cent while exports of raw cotton also recorded a year-onyear decline of 47.14 per cent.

Exports of value-added products grew in terms of both value and quantity during the July-May period. The preferential access to the European Union under the GSP+ scheme hasn’t boosted proceeds due to a slump in demand.Last year, the government announced a textile policy that gave a 4 per cent rebate on the exports of readymade garments on a 10 per cent incremental increase over the preceding year, 2 percent on home-textiles and 1 per cent on fabric. No support was announced on raw material or yarn exports. Jan 15 onwards, the government has not only increased the rebate to 7 per cent for readymade garments, but also allowed cash support of 4 per cent on yarn and grey cloth under the Rs. 180bn package announced by the Prime Minister.

Out of the total allocations, an amount of Rs. 107.5 bn was allocated to textiles sector – Rs. 87.5 bn for drawbacks and Rs 20 bn for withdrawal of duties/taxes on import of cotton and machinery. Moreover, an amount of Rs 12.5 bn was the annual allocation for drawbacks on export of non-textile value added sectors. The export finance rate is currently at 3 per cent, which is the lowest in a decade. Spinning and ginning sector have been included in the long term financing facility. The sales tax zero-rating regime for the five export sector was continued in the fiscal year 2017-18.