The recent 15% contraction in Pakistan’s textile exports, amounting to $16.5 billion during the current fiscal year, is a concerning indicator of the challenges faced by the industry. High production costs, liquidity constraints, and reduced global demand have been persistent adversaries throughout this period. It is crucial for the government to take decisive action to uplift exporting industries, particularly textiles, which have long been the backbone of Pakistan’s economy.
To revitalise Pakistan’s textile exports, redirecting taxation is a crucial step that demands strategic allocation. PBC’s estimation of the true potential for taxing the real estate sector at Rs.500 billion and an additional Rs.234 billion from the retail and wholesale sectors highlights the substantial revenue that can be generated and potentially reinvested in the textile industry. The proposal to increase advance income tax on property transactions to 7% for non-filers could further contribute to tax revenue. Likewise, implementing a withholding tax of 20% on business class tickets for non-filers can add to the pool of resources.
Addressing under-invoicing, which has resulted in a revenue loss of Rs.488 billion, requires Electronic Data Interchange (EDI) on import values with major trading partners and transparent customs valuations. By doing so, the government can curb unfair competition and create a level playing field for the textile industry.
Furthermore, adopting austerity measures, such as freezing new vehicle purchases, offers potential savings of Rs.400 billion over the next two years. This fiscal prudence can create opportunities for targeted investments to support the textile sector.
We must not overlook the potential for diversification within the textile sector. Data from the Pakistan Bureau of Statistics (PBS) highlights varied performances across different textile categories. While readymade garments and knitwear faced value declines, their quantities grew. This presents an opportunity to capitalise on these growing segments by investing in research and development to create innovative and trendy products that cater to evolving consumer preferences.
Revitalising textile exports should be a priority for Pakistan’s economic resilience. These targeted measures will not only drive growth in the textile sector but also foster economic stability and prosperity for the nation as a whole.