KARACHI: Cotton yarn export continues to show sustained growth; however, most of the value-added textile goods have been registering decline in exports during last several months.
This trend is also evident from the beginning of the current fiscal as on an average monthly export of cotton yarn continue to show a rise of 20 per cent. It is more alarming.
As a result of this trend cotton yarn prices in the domestic market have been persistently increasing, thereby, making it difficult for value-added textile exports to stay competitive in the world market.
Already confronted with high cost of inputs the value-added textile industry is on the verge of collapse and according to industry sources around 300 units of readymade and knitwear industry have been shut down alone in Karachi.
There is a strong demand from value-added industry to put some quota on cotton yarn exports to ease prices in the domestic market and allow the industry to compete in the world market where survival in post-quota era has become difficult.
They rejected the often raised demand by the spinning industry under the umbrella of APTMA that a sort of support or subsidy should be given to yarn manufacturers and exporters.
Pakistan Bedwear Exporters Association (PBEA) chairman Shabir Ahmed said that there was no case for yarn manufacturers to claim any sort of support or subsidy from the government because cotton yarn exports were rising consistently and thereby causing damage to value-added industry.
He questioned, how could you allow yarn exporters a subsidy or support when official figures verify that exports were on the rise and the spinning industry was minting money on both ends i.e. domestic and the world market.
The outgoing APTMA chairman Ahmed Koli Khan and the incumbent chairman Shafqat Elahi have made appeals to the government to allow a subsidy to spinning industry.
The value-added industry on the other hand argues that even if the government gives any support to spinning industry this would mean that our competitors in the world market would get the benefit indirectly and enjoy an edge over our products.
Iqbal Mangrani, former chairman of All Pakistan Cloth Merchants Association said that the government had rightly formed two committees to look into the problems of textile industry.
He said a committee formed under the chairmanship of Tariq Saigol had been trusted with a task to give findings and recommendations on short term basis. The committee had been asked to work on the costing of textile industry and submit its report within a month; he added.
Similarly, the prime minister has asked the Planning Commission to formulate an Export Plan in coordination with all concerned ministries, departments and stakeholders. The objective was to raise exports-to-GDP ratio from 13 per cent to 15 per cent in the next five to six years.
When looked at the government planning it could be easily concluded that no amount of yarn export could help improve exports-to-GDP ratio and the only way out is by increasing exports of value-added textile goods and this also hold to the solution of unemployment as the readymade garments, knitwears and bedwear industries are labour-intensive; Iqbal Mangrani added.
According to official figures cotton yarn exports during the first month of current fiscal 2006, month of July, rose by 20.21 per cent over the July 2005. Similarly, exports of cotton yarn during August 2006 recorded a rise of 21.61 per cent.
Against this most of value-added textile goods have been showing consistent decline in exports. During July 2006 cotton cloth exports declined by 12.55 per cent, knitwear by 1.11 per cent, bed-wear by 9.61 per cent, towels by 16.74 per cent and readymade garments by 7.50 per cent.
During second month of current fiscal i.e. August exports of cotton cloth were down by 8.77 per cent, knitwear by 8.30 per cent, bed-wear by 11.20 per cent, towels by 5.99 per cent and readymade garments by 3.62 per cent.
When yarn prices of October 2005 are compared with those of October 2006, there is substantial increase in prices and no wonder the export industry is faced with multiple issues, including of high cost of capital, high utility charges and taxes.
A leading exporter of readymade garments said that 10/single count cotton yarn in October last year was available at Rs400 per 10 lbs was now quoted at Rs455 and 16/single count was sold at Rs415 per l0 lbs was now being quoted at Rs470.
The 21/single count last year was being sold at Rs475 was now available at Rs530 per 10 lbs. Cotton yarn prices rose 20-25 per cent in a year, he added.