Pakistan’s textile and clothing industry is struggling to compete with its regional rivals due to the stringent taxation measures introduced this fiscal year, according to WealthPK.
Data from the Pakistan Bureau of Statistics (PBS) shows that textile and clothing exports fell by 3.09% in July 2024. The sector, once the backbone of the export economy, has been hit hard by new tax policies and rising energy costs.
Despite an installed capacity of $25 billion, textile and clothing exports have stagnated over the past two years. Exporters attribute this to structural issues within the industry. In absolute terms, exports dropped to $1.27 billion in July from $1.31 billion in the same month last year, representing a month-on-month decline of 10.13%.
This decline follows a trend of negative growth, with a 0.93% decrease in June. Although there was a significant rebound in May, with double-digit growth, the textile sector continues to face challenges, mainly due to unfavorable policies.
The detailed PBS data reveals mixed results across different textile sub-sectors. For example, readymade garment exports increased by 7.57% in value and 8.47% in quantity, while knitwear exports fell by 1.88% in value and 6.37% in quantity.
Bedwear exports experienced a 1.20% decline in value but saw a 4.07% increase in quantity. Towel exports decreased by 3.67% in value and 2% in quantity, and cotton cloth exports dropped by 0.56% in value and 4.72% in quantity.
Yarn exports saw a sharp decline of 42.54% in July compared to the same period last year. On the other hand, exports of tents, canvas, and tarpaulin rose by 14.22%, and other textile items saw a significant 53.20% increase, indicating a shift in the export composition.
On the import side, synthetic fibre imports fell by 33.23%, and synthetic silk yarn imports by 17.68%, while second-hand clothing imports increased by 13.47%. Overall, total exports for July increased by 11.75% to $2.31 billion, up from $2.06 billion in the same month last year.
Oil imports surged by 60% to $1.26 billion, with petroleum products rising by 39.94% in value and 36.89% in quantity. Crude oil imports, in particular, soared by 626% in quantity and 687% in value. Meanwhile, mobile phone imports decreased by 5.30%, while other mobile apparatus imports grew by 69.45%.
As a major employer, the textile industry needs a balanced approach that fosters competitiveness while ensuring fiscal sustainability. The disparity in export performance across sub-sectors highlights the need for targeted interventions to address the specific challenges facing different segments.
Policymakers must collaborate with industry stakeholders to develop solutions that mitigate the impact of high energy costs and unfavorable taxation, while also promoting innovation and efficiency in the textile sector.