Trade Chronicle May - June 2020

TRADE CHRONICLE
Impact of Budget 2020-21
on Textile sector of Pakistan
By: Muhammad Nawaz Iqbal
Pakistan's textile sector is the essence of
this country since independence. It is the
most significant manufacturing industry in
the country. It considered being the
backbone of the economy. According to
the Federal Bureau of statistics, textile
exports stood at $751.28 million in May
2020, or a 37% decline when compared
to the exports worth $1.185 billion in May
of last year. Experts pointed out that this
was the second successive month of a
massive reduction in textile exports amid
the global pandemic. Whereas, in eleven
months (July –May 20) export reached $
11.567 billion, recording a decline of over
6 per cent on YoY basis. Thus, a high
hope pined by textile exporters with the
upcoming budget.
Association has requested the expulsion
of obligation on cotton imports and a
discount of five per cent on material fares.
This request came at once with the
closure of around 110 factories because
of different boundaries to development
due to the vital emergency. Due to the
global outbreak of COVID-19, like other
sectors, the decrease in textile fares had
additionally declined the nation's general
traditions obligation on the import of
crude material utilized in the assembling
of interlining to lessen the expense of
creation. Government has been
amazingly responsive and have been
tuning in to the ventures and taking
measures on a continuous premise, like,
reshuffling of GST rates from 17 to 4,
permitting discount collected expenses, if
there should be an occurrence of
materials and so on. The textile industry is
expecting a severe global recession in
upcoming months which will not only
mark a negative impact on production but
also leads to downsizing. This impact will
The Federal Budget contents some relief
on domestic sales of garments but offers
lesser incentives for the export sector.
Hence, All Pakistan Textile Mills
Association (APTMA) has rejected the
budget for FY 20-21 remarked that it
failed to address serious industry issues in
the light of the negative impact on exports
from the worldwide Covid-19.
Pakistan is additionally third-biggest
exporters of Cotton in the World. Textile
contains 57 % of Pakistan's export
earnings. Butt lately, export revenues
have declined fundamentally. Textile
export revenues were recorded at
$11.625 billion in 2014-2015, which
further declined by 7.7% to $10.395
billion in 2015-2016.
Rightly, the Pakistan Textile Exporters
Association (PTEA) as of late mentioned
the administration to take noteworthy
measures to guarantee the development
of material fares and support the work
given by the division.
In particular, the PTEA has mentioned:
zero-rating on sending out worth chain
(for example no expense, no discount) to
support trade development sponsor a
lessening in cost of creation to support
the seriousness of Pakistani fares
gracefully guarantee vitality to material
factories at serious rates.
Besides, the Pakistan Textile Mills
fares during the month of March.
The nation's fare of merchandise had
declined by 8.46 per cent year-on-year to
$1.807 billion in March, from $1.974
billion amid conclusion of retail outlets.
Due to such a scenario, the textile sector
has expected the significant budget to lift
the industry, but Pakistan's Textile sector
did not accept the Budget 2020-21. Due
to the terrifying impact of COVID-19, the
textile sector needs and expected much
relief in budget 2020-21.
Besides the historical tax-free budget,
APTMA still not found any possible
solution for business hurdles that keep
the industry running with significant pace.
The government of Pakistan has
bolstered the material business by
absolving 5% customs obligation on
imports of crude material i.e polyester for
button makers which will probably
support small material players. Yet, the
administration likewise decreased
severely hit the SME's who played a
significant contribution to textile exports.
The Federal administration is entirely
mindful about the circumstance and
conditions made because of Corona
Pandemic, whereby, the worldwide
financial log jam has additionally
influenced the economy of Pakistan. The
government needs to help the business
to elevate the national economy, which
has been confronting the unique
arrangement of difficulties.
Textile exports contribute around 12 per
cent to the country's GDP, and in fact, the
sector needs more room to stretch the
business for better financial outcomes.
In last, APTMA urged that new textile
policy, implementation of which is in
principle approved should be applied in
true letter and spirit for Pakistan to
maintain and increase employment and
exports.
TRADE CHRONICLE - May.~ June. 2020 - Page # 13