NO ECONOMIC REVIVAL WITHOUT REVIVING EXPORTS, APTMA

Honorable Shahbaz Sahib,
I write to bring your attention to the critical challenges faced by Pakistan’s textile sector, which
contributes more than 60% of total exports. The textile sector has significant potential to
contribute to economic revival, through its dominant position in Pakistan’s export palette. To
realize this potential, it is crucial to adopt and implement appropriate policies. The textile
industry which has the installed capacity and potential, commits to support Pakistan’s
Economic Revival through realizing the additional $10 billion installed export capacity.
It is extremely disheartening to note
that our exports have fallen
significantly. The total export of goods
and services decreased from$ 39.595
billion in FY 22 to $ 35.21 billion in FY
23, a 11 % drop. Market share of the
international trade in Textiles declined
to 1.76% from 2.2% in FY22 while our
competitors have taken up the space
vacated. This sustained decline in
year-on-year monthly exports
throughout the fiscal year is alarming. 50% of the existing production capacity is currently
inactive or idle and as a consequence of non-continuation of RCET, another 25% is on the
way to shutting down.
Sir, our exporters are no longer able to book or canvass for orders as they are unsure of cost
and ability to deliver at competitive rates while neighbouring countries of India and
Bangladesh have been making remarkable progress in their textile exports.
India’s exports of goods and services for FY2022-23 surpassed its target, reaching $770 billion.
They are now aiming to achieve at least $900 billion worth of exports for FY2023-24 and have
set a long-term goal of $2 trillion by 2030. India’s Integrated and Sustainable Textile Policy
FY2023-2028 has provided export-oriented manufacturers with significant incentives, such as
government equity, low-interest financing, and electricity subsidies. The power tariff of 6
cents/kWh offered to Indian textile manufacturers in Maharashtra* due to subsidies is
significantly lower than Pakistan’s rate of 16 cents/KWh. Additionally, Indian manufacturers
* 90% of the Base Industry is located in Maharashtra enjoy subsidized credit at 5-7% interest, while Pakistani manufacturers face interest rates of
over 22%.
Similarly, Bangladesh has set a target of $72 billion for exports in FY2023-24, an increase
from $64 billion in the previous fiscal year. Their progressive policies, including tax reductions,
access to low-interest financing, and the establishment of ancillary industries and
infrastructure, have contributed to their success. Bangladesh offers power at 10 cents/kWh
and provides export rebates of up to 8% on most items and interest rate of 6%. Bangladesh
also operates zero rating on exports where by no issue of refunds arise.
In contrast, Pakistan’s Textiles and Apparel Policy 2020-25, which emphasized market-driven
exchange rates, tariff rationalization, and provision of stable energy supplies at regional
competitive rates, has faced significant implementation challenges. The withdrawal of the
Regionally Competitive Energy Tariff (RECT) earlier this year has severely curtailed the
competitiveness of our exporters. Additionally, high interest rates of 22%, the withdrawal of
zero-rating facility (SRO 1125), non-functioning of the FASTER system, and delays in sales tax
refunds have caused a severe liquidity crunch in the textile sector.
Honorable Prime Minister, it is evident that immediate action is needed to revive Pakistan’s
export sector and restore its confidence and competitiveness. It is requested to intervene
through addressing the following issues:
1. A Cost of Service based tariff for electricity be extended to export sector, as per actual
NEPRA determination. This tariff should exclude cross subsidy, stranded costs and
excess T&D losses, as these cannot be exported.
2. A comprehensive review be undertaken of the Textiles and Apparel Policy 2020-25 to
identify and address implementation challenges, ensuring policy continuity and foster
a favourable investment climate.
For any economic revival, exports will necessarily play a key role, and the Pakistan’s textile
industry holds the potential to make a substantial contribution (60% of the total exports) to
this revival. By implementing appropriate policies as discussed above, we are confident that
the textile industry will generate an additional $10 billion in exports, within the next financial
year.
Urgent and decisive policy measures are required to tackle the above-mentioned challenges;
neglecting them is likely to result in a further decline in exports, of about $4 – $5 billion which
the country can ill afford.