Spinning a yarn

LAHORE: Spinners are demanding various concessions claiming that the increase in power and energy tariffs have made them non-competitive, yet the 33.5 percent increase in yarn exports in the first quarter of this fiscal speaks otherwise.

This is the period when power and energy rates were jacked up. Pakistan exported 114,818 metric tonnes of cotton yarn worth $315.40 million during the July-Sept 2023 quarter compared with exports of 73,209 metric tonnes of yarn worth $236.26 million.

Energy and power is a major input for the spinning sector. During the month of September, yarn exports increased by 49.8 percent to 41,563 metric tonnes compared with the yarn exports of 22,545 tonnes achieved during September 2022.

Yarn exports in fact were the highest among all manufactured textile items during the first quarter of this fiscal. Textile exports declined to $4.12 billion in Q1 from $4.58 billion achieved during the corresponding period of last fiscal. This depicts a decline of 9.95 percent.

In September, the textile and clothing exports declined by 10.88 percent to $1.36 billion from $1.52 billion in the same month last year. Caretaker Commerce Minister Gohar Ejaz last month announced to offer regionally competitive energy prices to textile exporters and resolve their cash flow issues by releasing pending sales tax refunds. Nothing has been done in this regard.

The most disturbing aspect of decline in exports is the decline in value-added exports.

The fact that there was an increase in volumes of both Knitwear and readymade garments showed that our exporters did get higher orders, but were forced to lower the rates due to global recession.

With the global situation improving the value-added sector might recover per unit value.

The Pakistan Bureau of Statistics data showed the exports of readymade garments shrank 11.21 percent in value in July-September, but grew by 8.24 percent in quantity; while knitwear dipped 15.83 percent in value, but grew 34.14 percent in quantity; and similarly, bedwear posted a negative growth of 10.02 percent in value, growing 1.39 percent in quantity.

The exports of textile and clothing contracted by 14.63 percent to $16.50 billion in FY23. However, the total merchandise exports dipped 12.71 percent to $27.54 billion from $31.78 billion in the preceding year.

Towel exports slightly increased by 2.89 percent in value and 16.24 percent in quantity, whereas those of cotton cloth dipped by 18.15 percent in value and 7.50 percent in quantity.

Textile millers are demanding regionally competitive power and gas tariff, as well as return to zero-rating regime to compete globally.

The increase in exports in volume of cotton yarn, cotton cloth, knitwear and readymade garments depicts that that export volume has increased meaning that the exporters obtained higher orders, but the value in dollars declined in line with the rates quoted by our competitors.

Another depressing news was the decline in the import of textile machinery by 75.38 percent in July-September. Pakistan lags behind its competing economies in technology and quality of textile machinery.

But it looks like expansion or modernisation projects are not the priority of our textile players. Most of the spinning industry is operating on outdated spindles that consume more power and more man power.