The recent surge in exports is expected to drive their value beyond pre-COVID-19 levels of $2 billion in October. The Ministry of Commerce says export orders from leading global brands are shifting to Pakistan. The low COVID-19 numbers reported in Pakistan are paying dividends. The government has also provided sharp concessions on electricity costs to the industrial sector which is likely to improve its competitiveness. That and incentives from the central bank are the shot in the arm helping exporters gain back market share.

However, the textile sector faces capacity constraints in taking advantage of the increase in demand for their products. The numbers on textile machinery imports show the degree of technology upgradation and capacity enhancement in the textile industry, particularly as the local engineering sector is virtually non-existent. Various reports on the performance of the textile industry pinpoint the lack of technology upgradation as a major impediment to the growth of textile exports.

Pakistan was one of the largest importers of textile machinery in 2003. It imports outpaced Bangladesh and Vietnam till 2006. But the sector’s machinery imports collapsed in 2009 to less than $200 million from a peak of $736 million in 2005. It has yet to recover to that level.

Industry consultants Gherzi, had warned in 2006 about the overaged textile machinery in Pakistan in a report presented to the Ministry of Textile Industry. That warning is even more relevant today. The majority of the sector’s imports are spinning machines, while Bangladesh is importing knitting machines. Pakistan imports significantly lower value of knitting machines than both Bangladesh and Vietnam. This speaks volume about the likely placement of Pakistani products in the global and regional value chains.

Considering the year-on-year growth rate in the imports of machinery products, power generating products and textile machinery between FY15 and FY20, it is apparent that imports of textile machinery into Pakistan have been rather limited. Although, the imports of power generating machinery were critical in resolving the crippling power crisis faced by the textile exporters, the lack of growth in the imports of the latest textile machinery suggests capacity constraints and inefficiency in production. As potential for exports increases with the recovery from the COVID-19 slump, the capacity constraints may lock Pakistani exporters out from rising opportunities. Therefore, it is imperative that textile producers and policymakers take into account the loss in competitiveness and possible loss of opportunities from the aging machinery and the poor rate of upgrading within the textile industry. Textile exporter should play the long game.


Comments are closed.