Pakistan’s trade deficit has surged to $7 billion during the first quarter of the current fiscal year. This is principally due to a decline in exports. Many manufacturing facilities in the textile industry have shut down. Policy measures decided for export-led growth include the elimination of customs duty on cotton from January 1, 2017; duty free import of raw materials like manmade fiber not manufactured domestically; graduating drawbacks of local taxes on yarn, greig fabric, processed fabric, home textiles, made-ups and garments; extension of long-term finance facility to indirect exports; input tax adjustment on packing materials; new gas connections for captive and process use; multi-year tariff for industry without incidence of surcharge for provision of electricity at a regionally competitive rate.

These measures are expected to remove the bottlenecks in operation of the textile industry. Providing an enabling environment would remove the hindrances presently impeding proper industry performance and have brought about a decline in exports.

The global textile market operates on very low margins due to its fiercely competitive character. Countries that have prospered by export-led growth include Germany, Japan, China, South Korea, Malaysia, Bangladesh and Vietnam. Pakistan’s export industry contributes heavily to GDP, foreign exchange earnings and employment.