LAHORE -  Textiles export major declines were witnessed in the non-value added segment, with export proceeds down 16 percent YoY to $850 million, led by a significant decline (20 percent) in cotton yarn proceeds to $304 million.

Lower export prices were realised coupled with depressed off-take (low base from 1QFY16) due to persisting yarn glut in China. To recall, spinning sector has been depressed since April14 as the Chinese government shifted its policy on stockpiling cotton.

According to experts, the value added segment displayed some resilience as our trading partners macros improved. Export proceeds slipped 2 percent YoY to Rs1.83 billion. Knitwear proceeds declined 4 percent to $606 million, off-take surged 26 percent amid a 24 percent price decline. Bedwear shipments surged 8 percent, boosting proceeds by 2.5 percent to $527 million, offsetting the 5 percent price decline. Readymade garment proceeds surged 3.7 percent to $525 million as prices improved 3 percent.

Pakistan’s textile exports fell to $3.03 billion during 1QFY17, a decline of 5.9 percent YoY or $190 million, as compared to $3.22 billion SPLY. Though, Textile product’s share in the country’s total exports have increased to 65 percent, up from 63 percent last year as Pakistan’s total exports have declined 9 percent YoY to $4.68 billion.

Broad factors limiting textile export growth include; weak trading-partner macros and global growth slowdown, relatively strong Pak Rupee vs regional competitor’s currencies, lack of value-addition/diversification and aversion to man-made fibers and domestic issues plaguing the sector such as energy crisis, pending tax refunds, high costs of business and cotton crop failure have limited new investment and led to shuttering of capacity within the industry.

Going forward, the garmenting sector is expected to do well as demand from EU and USA picks up. Experts highlight FY17 budget incentives along with talks of Rs120-180 billion package for exporters: key points would be revision of duty & taxes on cotton & machinery, zero-rating of packaging material, DLTL scheme with higher rates would apply on total export proceeds rather than incremental value, and not to forget any potential Rupees depreciation would also bode well.