Pakistan’s garment exports could fall by 35% due to flood fallout

Pakistan’s textile and garment exports amounted to $21 billion in the financial year 2021-22, the All Pakistan Textile Mills Association (APTMA) said, but now, due to the devastation caused by the floods, industry experts fear a likely cancellation of many exports. orders by international brands.

With more than 40% cotton production in Sindh province, southern parts of Punjab province and parts of Balochistan flooded, APTMA and other industries fear that textile and garment exports will plummet in due to declining production and rising costs, with APTMA noting that this will affect “the government’s vision to reach the export volume of US$50 billion in the coming years.”

With a view to fostering exports and boosting the country’s economy, last month (August), APTMA unveiled a plan to launch a roadmap to reach $50 billion in exports by increasing the the country’s sewing-oriented garment manufacturing to process an additional 3 dollars. billions of yarns and fabrics. In this way, it would boost Pakistan’s value-added garments for export, generating additional revenue of $10 billion.

But Emad Raza, chairman of the Manufacturers and Exporters Association of Ferozepur Road (MEFRA), Lahore, said the floods could jeopardize those plans. A decline of at least 30% to 35% is now expected in apparel and textile exports in the current fiscal year ending June 30, 2023, he said.

“We can’t do [artificial] indigenous fiber, so cotton is our real strength and as a large part of the cotton crop is destroyed in the provinces of Punjab and Sindh – the two main cotton producing regions of the country – due to flooding, we have to import cotton that would definitely increase the cost of our production,” he told Just Style.

The Pakistan Textile Exporters Association has suggested to the country’s Federal Finance and Revenue Minister, Miftah Ismail, to allow cotton imports from neighboring India as it would be cheaper than cotton imports from Central Asian countries and other places. However, the government has not yet taken a decision in this regard.

The problem here is that Pakistan suspended trade with India after New Delhi abolished the (and disputed) self-governing state of Jammu and Kashmir in 2019 and replaced it with two union territories with less powerful local governance.

Emad argued that the government should allow imports of cotton through the Wagah border post between Lahore and Amritsar, which would cost Pakistan’s textile industry much less than importing the product through Dubai, the cheapest alternative. likely. The government should seriously consider the proposal if it still wants to increase exports from $21 billion to $26 billion by 2025, shorten cotton import time and cut costs, he said.

According to Emad, the floods have devastated Pakistan’s garment and textile sector supply chain and could – if the cotton shortage is not handled properly – increase unemployment.

This would put pressure on the government of Prime Minister Shehbaz Sharif, which only took office in April (2022), after toppling the administration led by former Prime Minister Imran Khan, who campaigned effectively against his rivals.

The government also faces annual inflation of 27.2% (in August) and high interest rates (15%), Emad said. These floods also followed torrential rains that hit a third of the country, damaging crops, roads and communication networks. The Pakistani media estimated the damage caused by these floods at 12.5 billion dollars.

Tahir Manzoor Chaudhry, former vice president of the Lahore Chamber of Commerce and Industry, put the losses at $18 billion, saying this is a “preliminary estimate as the magnitude could go well beyond when the final figures are compiled by the relevant government institutions. ”

“It’s a very difficult time for the industry,” so the government should convince richer countries to provide more financial aid, while announcing incentives for exporters in terms of taxes and duties. customs, among other measures, suggested Tahir.

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Michael O. Stutler