Textile exports continued to inch up in Aug-18 as value added segments witnessed moderate growth while there was also in up tick in cotton yarn and cloth exports. According to data released by the Pakistan Bureau of Statistics (PBS) textile exports were up 4 percent in 2MFY19 on a year-on-year basis.
The figures were slightly better for Aug-18 which saw overall textile exports go up by 7 percent as compared to Aug-18. Knitwear has recorded the highest growth on the back of high volume which increased by almost 30 percent in Aug-18. Readymade garments and cotton cloth also witnessed rise in volumes by 27 and 11 percent respectively.
Growth in textile exports can be mainly attributed to the rupee depreciation which has allowed exporters to get more orders in international markets. The incentives provided to the textile sector under the PM incentive package have also provided a boost to the sector.
Going forward, the sector is set to benefit from exemption when it comes to increase in gas prices. Recall that the Punjab based textile industry is getting 28 percent system gas and 72 percent RLNG at an exorbitant rate of almost Rs1500/MMBTU.
The government has decided to exempt zero-rated sectors including textile, leather, sports and surgical goods from the increase in gas prices to lower their cost of production by giving a subsidy to the tune of Rs44 billion.
In addition, the recently amended finance bill has also provided slashing of duties on more than 80 items which would provide relief to the local industry worth almost R5 billion. There is also a probability that the government will also lower electricity tariffs for the sector.
However, procurement of raw materials has remained problematic for the industry and the shortfall in cotton production has not helped either. The earlier imposition of duty on imported cotton had further complicated matters.