Textile exports continue recovery

At long last, textile exports seem to be building some momentum with value-added segments pushing the sector’s growth. According to figures released by the Pakistan Bureau of Statistics (PBS), textile exports for the month of May-18 increased by an impressive 28 percent which has been the highest recorded growth for the month of May in the past several years.

Knitwear, bedwear and readymade garments all posted strong double-digit growth for May-18 on a year-on-year basis. Amongst these value-added segments, knitwear has continued to post impressive growth for the past three months at an average rate of almost 30 percent on a yearly basis.

Save for knitwear which recorded both a 13 percent increase in price as well as a 23 percent growth in volumes, the remaining main categories including readymade garments, cotton yarn, bedwears and towels witnessed growth in volumes.

This up-tick in volumes is mostly attributable to the depreciation of the rupee to make up for the uncompetitive price of textile exports as compared to regional peers such as Vietnam, Bangladesh and China in international markets. Recall that the rupee has depreciated by almost 15 percent in the past six months and the slide still continues.

However, textile exports continue to woe the prolonged delay in processing of sales tax refunds and DLTL claims which have affected liquidity and constrained capacity to take on more orders. Textile industry stakeholders believe if refunds are processed on a timely basis, the sector can register even higher growth.

As for the 11MFY18 period, overall textile exports increased by 9.8 percent in dollar terms as compared to the previous year. The highest contributors during the period have been knitwear with a growth of 17 percent followed by readymade garments and cotton yarn at 13 percent and 10 percent respectively. The highest growth recorded on a volume basis during the FY18 period was by readymade garments and cotton yarn which both saw growth in volumes of 14.7 percent on a yearly basis.

Even though the devalued rupee and the government incentive package has afforded some measure of relief to textile exporters, this surge in growth cannot continue in the absence of some policy shifts by textile stakeholders as well. The world is rapidly abandoning cotton-based textiles in favour of man-made fibers which are better quality and more durable. A more evolved product range is also on the cards if growth is to be sustained over the coming years.