Despite the 6 per cent research and development assistance, textile sector performance is poor, showing exports growth by one per cent during the first four months of the current fiscal year 2008, and 10 per cent decline in the month of October.
However, exporters blamed the country's situation for the slow growth, saying continuing political turmoil and high cost of production had slashed already dwindling textile exports by 10 per cent during October 2007.
They said during the last few months, the county was faced with political crisis, which badly affected the exports, adding that despite hard efforts, things did not look up. The soaring prices of cotton and cotton yarns have also put a negative impact on the cost of products, they maintained.
On the other hand, experts said despite getting some Rs30 billion subsidy on account of research and development during the last one-and-a-half-year, textile sector had not improved efficiency, depicting dull growth on account of exports during the current fiscal year.
With over 65 per cent share, textile exports had dipped by 9.28 per cent to 836.855 million dollars during October 2007, compared to 922.416 million dollar mark during September. On monthly basis, textile exports during October, compared to the corresponding period of the last fiscal, have increased by 2.74 per cent, as in October 2006 they stood at 814.552 million dollars.
Overall textile exports during the first four months of current fiscal year also showed poor performance, as during the July-October period, textile exports witnessed a growth of one per cent as against the target of over 7 per cent growth.
Textile exports during July-October reached 3.649 billion dollars, compared to 3.612 million dollars during the same period of last fiscal, depicting a slight jump of 37 million dollars during the first four months.
"We were expecting that the country's textile exports would decline in the January 2007, however they showed downward trend in October 2007, which is a matter of concern," exporters said.
They said that the due to political crisis and uncertainty in the country, foreign buyers were reluctant to visit Pakistan. "Rising prices of raw material including raw cotton is another factor behind the poor performance of textile sector," they added.
They said during October, export of 5 textile products including raw cotton, knitwear, towels, readymade garments, tents, canvas & tarpaulin had declined, while the exports of cotton yarn, cotton cloth, bedwear, art, Silk, and synthetic textile had gone up.
Major competitors are China, India and Bangladesh and their textile products are available at low prices, they said, and added that inefficient marketing strategy in the world market had also created problems for them.
During the first four months of the current fiscal year, raw cotton exports dipped by 6.43 per cent to 11.424 million dollars compared to 12.209 million dollars during the same period of last fiscal year 2007.
Cotton yarn export declined to 452.323 million dollars from 452.693 million dollars showing 0.08 per cent decline. Similarly, the export of cotton cloth witnessed a decline of 8 per cent during July-October 2007, reaching 608.503 million dollars from 661.679 million dollar.
Cotton carded or combed is the most affected part of the textile sector, whose exports show a major decline of 51 per cent during the first four months. During July-October 2007, cotton carded exports stood at 1.288 million dollars compared to 2.643 million dollars during the corresponding period of last fiscal year.
However exporters are still confident that during November and December exports would go up due to Christmas and new-year celebrations.
On the other hand, Ministry of Textile Industry has linked the 6 per cent Research and Development support with provision of complete business and R&D expenditure information from the registered textile units. The ministry has categorically said that no unit would be provided with six per cent R&D assistance unless it provided required information.
All registered textile units have been instructed to submit the details of their business and expenditures of Research and Development to the ministry. In this regard, the ministry has issued a letter (No F.8 (28-B)/ TID/07-P-1) along with a nine pages pro forma, which is required to be filled in and completed by all textile units availing Research and Development (R&D) under the Ministry SRO 803(I) /2006.
"The ministry of Textile Industry requires information for its data bank regarding all the registered textile companies to make a comprehensive policy for future support to the industry for R&D," the ministry said in a letter.
However, in the second paragraph, the ministry has asserted that under the SRO 803(1) /2006, it is mandatory to verify and check the record, adding that "in case of none compliance, the ministry reserves the right to delete the name of the association or defaulter and may issue instructions to the State Bank of Pakistan not to entertain the R&D claims for further allowing R&D support facility, which is being providing under the said SRO".
The ministry has sent the letter to the top 12 textile associations, including All Pakistan Textile Association, Towel Manufacturers, All Pakistan Bedsheet and Upholstery Manufacturers, Hosiery Manufacturers, Bedwear Exporters, Textile Exporters, Denim Exporters, Cloth Merchants etc.
The nine pages pro forma required to be filled in comprises equal number of sections seeking the textile industries to provide all details of their machinery, employees, R& D expenditures etc. Section one asks about the company profile, including detail of membership of associations, while section two requires information vis-à-vis quality and environment compliance.
Section three requires infrastructure information; section four, machinery and further investment; section five, human resource; and section six requires information regarding operations and manufacturing. In section eight, the ministry has asked as to how much R&D support has been collected by the textile units as well as expenditure of these amounts, besides expenses of staff training and information technology.
Textile industrialist and associations have expressed concerns over the situation and decided to develop a joint strategy against the notices of textile ministry.
It may be mentioned here that the Ministry of Textile last year announced 5-6 per cent R&D support on exports to make the textile exports competitive in the international market.
