Pakistan’s textile industry is poised to reap the advantages of potentially winning Generalized System of Preferences Plus (GSP-plus) from the European Union (EU) and the marked depreciation of the rupee against the dollar in the last few months.
Speaking to the Express Tribune, Yasin Siddik, chairman of All Pakistan Textile Mills Association, said that GSP-plus status, if it finally comes to fruition in January, could help lift Pakistan’s textile exports to $15 billion for the year. Last year, Pakistan’s textile imports hit $13 billion. The textile industry accounts for more than 50 percent of the nation’s total exports.
Pakistan might also benefit from the shifting sands of global textile trade. China increasingly reroutes its focus from textiles to technology, creating new opportunities for additional players to join the market. Also, Western retailers pine for an alternative to Bangladesh, a low-cost, high capacity producer that is a politically risky bet given its seemingly intractable problems with compliance.
The decline of the rupee, which has fallen 8 percent since the beginning of the year, also been a boon to exporters. In the last two months alone, it has dropped 4 percent against the dollar.
Still, Pakistan is not without its challenges. A steep rise in gas and electricity prices will likely consume much of the additional revenue textile exportation produces. The gas tariff for captive power plants has risen by 17.4% and electricity rates for industrial units has skyrocketed 57% in recent months. And Pakistan’s stalwart regional competitor, India, is anticipating a big year as well, forecasting $17 billion in textile exports. Pakistan could improve its standing even more if it wins duty-free access to US markets this year, a longstanding aspiration.
While Pakistan’s textile imports account for a modest 1.5% of the global market, it is widely projected to grow substantially, some predicting the industry will double over the next five years to $26 billion.