Pakistan’s textile exports fell 15 per cent in October 2022. A severe liquidity crunch is said to have adversely impacted export growth. Value-added textile exporters are facing severe problems regarding sales tax refund payment orders besides waiting for those deferred amounts. In the meantime, exporters say, their business activities are being hampered, reversing the progress in exports made in the last fiscal year.
Since exporters do not get sales tax refunds on time, they are unable to procure raw materials and other accessories to execute their export orders and this will ultimately affect the country’s foreign exchange reserves, which are constantly declining.
Pakistan’s textile and apparel industry is the backbone of the economy, constituting eight per cent of GDP, 40 per cent of the industrial labor force and more than 60 per cent of the country’s exports while its manufacturing share is 46 per cent. Exports of readymade garments increased 28 per cent during the last fiscal year. The value-added garment sector is the major tax payer and the largest employment generator in the whole textile chain. The country’s apparel industry is playing a pivotal role in foreign exchange earnings, besides being a major tax payer and generating large employment in the whole textile chain.