Will textile boom last long?

Mills should quote attractive prices, offer quality products to attract global buyers

KARACHI:

Covid-19 has turned out to be a blessing in disguise for the textile industry as global buyers are increasingly turning towards Pakistan by cutting orders to regional players, resulting in 100% utilisation of available production capacity.

Almost all the major players in the country are in the process of expanding their capacity in a bid to create room for the growing number of export orders, especially for home textile. “Conditions for Pakistan’s textile industry are very favourable and it is working at full capacity,” remarked Taurus Securities’ textile sector analyst Hania Nabeel while talking to The Express Tribune.

Textile orders were pre-booked till December 2020 and for some companies till June 2021. However, it remains to be seen whether the industry will continue to receive such orders in future as well.

Textile orders have shifted to Pakistan because of the more severe impact of the Covid-19 pandemic on regional countries. This has given Pakistani exporters, particularly the key market players, an opportunity to quote competitive prices and offer better quality products so that the new buyers could become their permanent customers. According to the Pakistan Bureau of Statistics, textile group exports registered an increase of 10.79% to $1.32 billion in January 2021 compared to $1.19 billion in January 2020.

The All Pakistan Textile Manufacturers Association (Aptma) has revealed that they have received bulk export orders, which will engage the industry for the next six months.

“The textile sector has received an overwhelming response from the international market with handsome orders pouring in from the US and European Union,” said Majyd Aziz, a textile exporter.

At present, textile mills are enhancing their production capacity and hiring manpower in order to meet export orders according to schedule despite challenges like high costs of raw material. The positive impact of the growth in textile industry is also being felt by the allied sectors including chemicals, logistics, packaging and other services.

“Demand for specific chemicals has increased as a result of the rise in textile production,” said Irfan Chawla, Director of Archroma Pakistan, a leading chemical producer.

“Domestic producers have the expertise and capacity to meet the increase in demand for textile chemicals,” he said. “Our company is supplying a full range of textile dyes and chemicals for the spinning and garments industry.”

However, he suggested that Pakistan’s textile industry should draw up a policy to sustain exports to the global market and that could be possible through innovative strategies.

“Export figures may drop in coming months,” Hania Nabeel cautioned, adding textile orders were higher than last year but were lower when compared with the past six months as Bangladesh and India were now reopening their industries and markets.

“It depends on Pakistani companies whether they are able to retain the increased orders or not,” she said.

Duty reduction on basic raw material imports can support import substitution, thus saving foreign exchange and creating jobs in the country.

The government should encourage local production and import substitution through duty cut, tax incentives on investment in manufacturing and early release of tax refunds for exporters, and it should create a level playing field for domestic supplies compared to imports, said the Archroma official.

The writer is a staff correspondent

 

Published in The Express Tribune, March 1^st, 2021.

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