Pakistan’s textile exports face decline

Pakistan’s textile and apparel exports to the United States are expected to face a decline of 18 per cent in 2011, owing mainly to the financial crisis in the US market and increase in price of raw materials. According to a study conducted by Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) recently, USA, one the largest market for textile products from Pakistan is currently traversing turbulent times due to the financial crisis, but retail figures indicate steady sales for 2011.
Textile and apparel exports to US are expected to increase by three per cent in terms of value but the quantities are expected to go down by 18 per cent in 2011; signifying growth primarily due to price inflation in raw materials cost.
Apparel exports to US are 49 per cent of its total textile exports, as compared to India’s 58 per cent, Bangladesh 97 per cent, China 73 per cent and Vietnam 93 per cent. While the products are well diversified, Pakistan’s exports to US seem to be overly reliant on cotton as the principal raw material. According to a study almost 94 per cent of textile exports are cotton based, in contrast to India’s 80 per cent, Bangladesh 79 per cent, China’s 48 per cent and Vietnam 57 per cent. Products made from non-cotton based raw materials such as wool comprise only two per cent of Pakistan’s exports to US, man made fiber based four per cent and silk and vegetable fiber based products comprise only 0.1 per cent.
During 2010, Pakistan’s apparel exports to US increased by 14 per cent in value and nine per cent in terms of quantities. While non-apparel exports increased by nine per cent in value and five per cent in quantity in 2010 over the previous year. In comparison, India’s apparel exports to US increased by nine per cent in value and one per cent in quantity. India’s non apparel exports made substantial gains increasing by 29 per cent in value and 25 per cent in quantity. Bangladeshi apparel exports remained strong, growing by 15 per cent in value and 16 per cent in terms of quantity. Bangladesh also managed to gain a sizeable share in non-apparels. While China and Vietnam posted solid growth in both categories.
For the year 2011, it is expected that Pakistan’s apparel exports to the US will increase by six per cent in value while non-apparel exports are expected to increase by one per cent. In terms of quantity, apparel exports will decline by 15 per cent, while non-apparel exports quantities are expected to decline by 19 per cent.
As evident from the above analysis, Pakistan’s textile and garment exports to US are clearly not growing at the desired pace, at least in the major categories. Our regional competitors are steadily increasing their share in the US import market. Although, growth in man-made fiber products is commendable; but since the quantum is very small, it will have no visible effect on overall exports.
While, Vietnam and Bangladesh are gaining major shares in apparel sector, India is steadily gaining in home textile sector. In order to stem this negative tide, Pakistan’s textile and garment exporters need to further diversify their exports to more value-added products, preferably in non-cotton products.
Pakistan also needs to step-up its trade diplomacy in order to do away with unfair tariff regime. A Free Trade Agreement (FTA) with USA would be highly beneficial. Currently, USA raises the same tariff revenue from Pakistan’s textile exports as from France’s $37 billion exports.