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Pakistan Trade Show to Draw $100 Million in Indian Orders

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In a rare show of rapprochement, Pakistan and India are increasing the collaboration between their garment industries. According to Arshad Aziz, chairman of the Pakistan Readymade Garment Manufacturers  and Exporters Association  (PRGMEA), Pakistan expects to generate $100 million in export orders from Indian buyers at an upcoming trade conference.

The trade show, “Made In Pakistan Expo 2014,” has already booked more than forty-five stalls. Indian consumers often enthusiastically favor Pakistani garments, particularly womenswear. The conference is designed to facilitate both business-to-client and business-to-business meetings, putting Pakistani manufacturers together with Indian importers. The show will feature approximately 120 exhibitors in total.

The strong response on the part of Indian buyers is likely, in some measure, attributable to the fact that Pakistan has been granted duty-free access to European markets under the Generalized System of Preference Plus (GSP), effective since January 1, 2014. While the new GSP status doesn’t exclusively impact Pakistan’s textile industry, it should be among the biggest beneficiaries. Bilal Qamar, an analyst at JS Research in Karachi, said, “The domestic textile industry is likely to take the benefit of adding value itself and increase direct exports to the E.U. after GSP Plus status.” More than 20 percent of Pakistan’s exports will enter the E.U. market’s tariff-free, and more than 70 percent will enjoy dramatically reduced tariffs.

Thirteen textile products are included on the list of those that can be exported duty free to the twenty-seven members of the E.U., accountable for $231 million worth of goods last year. Some are predicting this will increase Pakistan’s exports to the E.U. by $1 billion.

Currently, the E.U. is Pakistan’s primary destination for its textile exports. Overall, Pakistan’s textile exports topped $13.06 billion last fiscal year, including $2.7 billion worth of yarn and $2.5 billion of fabric to Bangladesh, specifically. Pakistan’s exports have grown by approximately 12.5% per year, with a growth of 10.3% to the E.U., in particular. The textile industry accounts for more than 50 percent of the nation’s total exports. While forecasts regarding the full reverberations of the new status for Pakistan vary widely, many predict growth by as much as 100 percent over the next four years.

India “graduated” out of its GSP status and has vigorously lobbied for its renewal. While it has great potential as a force in the apparel and textile industry, it also faces daunting challenges. Blessed with an enormous workforce of young, deeply discounted labor, India has unlimited promise. However, it has historically struggled to keep apace with China and Bangladesh, the region’s dominant players. For a nation of its dizzying size, its $32 billion worth of textile exports last year is an underachieving number. It can’t yet hope to reach China’s $260 billion, but comparatively tiny Bangladesh took in $21 billion in the same period.

For India to draw business from China, it has to improve its often underdeveloped infrastructure and unwieldy labor regulations. As it stands today, India isn’t large enough to absorb the capacity of China or cheap enough to lure away bargain hunters from Bangladesh. But it does have a large enough population, and a skilled enough workforce, to become one of the world’s top exporters.

And there are portents of future success. India’s exports are expected to leap 30 percent over the next year, coming in close to $44 billion. The government has been revising its cumbersome oversight rules, erasing a limitation on how much money could be invested in garment factories. On the other side of the coin, their labor laws have become impressively more stringent.

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