Pakistan Textile Exports hit record US$1.4bn in December 2020

January 18, 2021

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Pakistan’s Textile exports witnessed 23 per cent YoY growth in December 2020 as post-COVID Export rebound continues. Exports for the period July-December 2020 have increased by 8% YoY.

Exports of readymade garments have increased by 11percent, knit-wear rose by 28 per cent YoY and bed wear increased by 39% YoY. Cotton cloth exports changed by -3/9% YoY/MoM and cotton yarn increased by 65/30% YoY/MoM.

During Six months period of July-December 2020, exports of readymade garments increased by 6% YoY as quantity exported decreased by 40% YoY while prices increased by 80% YoY. Bed wear exports increased by 16% YoY while Knit-wear exports rose by 17% YoY. However, the cotton cloth exports declined by 8% YoY as volumes declined by 42% YoY. Cotton yarn exports decreased by 26% YoY as quantity fell by 21% YoY (prices declined by 7% YoY).

Pakistan has witnessed a low level of the Cotton crop with the production of only 5.5mn bales from 1-Jul-2020 to 18-Jan-2021 versus 8.3mn bales last year in the same period, a fall of 34% YoY. Primary reasons for the decline in cotton production are excessive monsoon rains & Locust attacks, supply chain disruptions due to COVID, low-quality seed and sowing over a lower area.

Due to a significant decline in local cotton production, cotton imports witnessed an increase of 512% YoY during 6MFY21. During December 2020, total textile exports increased by US$259mn YoY whereas imports also went up by US$210mn YoY. The situation for six months period of July-December 2020 was even weaker, where Textile exports increased by US$538mn YoY While Textile imports increased by US$685mn.

Hence, On-net Growth Basis Pakistan’s Textile sector witnessed a loss for six months period ended in December-2020.

Pakistan’s Government is currently formulating a Five-year Textile Policy where proposition include electricity tariff for Textile units at a lower rate of 7.5cents/kWh, RLNG at the US$6.5/mmbtu, payment of duty drawback of tariff for value-added products (up to 4%) and continuation of Export Finance Scheme (EFS)/Long Term Financing Facility (LTFF) schemes at lower rates. The estimated expense of Textile Policy is projected to be around PKR 1 Trillion over the next 5 years.

In a nutshell, the Textile sector has recovered from COVID induced slowdown by growing aggressively in both domestic and export markets.
However, the Textile Sector fortunes now depends on cotton-seed quality, Improvement in Local Cotton Production, value addition. Support from Central Bank and the government will help improve the dynamics of the sector.