Textile Machinery Orders Plunge 30% in Q2 2023, ACIMIT Reports
During the second quarter of 2023, the orders index for textile machinery witnessed a significant drop of 30% compared to the same period in 2022, according to ACIMIT, the Association of Italian Textile Machinery Manufacturers. The absolute index value stood at 85.1 points (basis 2015=100).
Reasons Behind the Decline
The decline in the textile machinery orders index is attributed to reduced collection of new orders both domestically and in foreign markets. Italy saw a 21% decrease in orders, while foreign markets experienced a more severe downturn of 31%. In absolute terms, the index settled at 81.9 points on foreign markets and 117.2 points in Italy. New orders for the second quarter corresponded to only 4.1 months of guaranteed production.
Impact on Production Capacity and Foreign Markets
ACIMIT's data also revealed that the production capacity utilization by Italian manufacturers reached 70% in the first half of 2023, a figure expected to remain stable in the second half of the year. However, uncertainty weighs heavily on foreign markets, with foreign trade statistics for the first quarter of 2023 indicating a slackening in Italian sales in important reference markets like Turkey, China, the United States, and Pakistan.
Hope for Recovery
Despite the challenges, ACIMIT President Marco Salvadè remains optimistic. While the decline in new orders precedes events like the international textile machinery exhibition ITMA, held in Milan last June, Salvadè emphasized that it is part of a negative trend persisting for several quarters. Feedback from over 400 Italian companies that participated in ITMA was positive, and Salvadè hopes that the contacts made during the event will lead to the demand for machinery in key textile machinery markets resuming a path towards growth.
Better Cotton and Cotton Egypt Association Partner for Sustainable Egyptian Cotton
Better Cotton, the world's largest cotton sustainability initiative, has joined forces with the Cotton Egypt Association (CEA) to expand the Better Cotton program in Egypt. This strategic partnership aims to enhance the sustainability and quality of Egyptian cotton production while ensuring fair working conditions for farmers.
Egyptian cotton, renowned for its exceptional quality and heritage, has faced challenges in recent years due to climate change, water scarcity, and market fluctuations. To safeguard the future of Egyptian cotton, CEA has teamed up with Better Cotton, renewing their commitment to sustainable farming practices.
Empowering Farmers for a Sustainable Future
Through this collaboration, both organizations will work to implement sustainable farming techniques and provide training and support to farmers. Compliance with rigorous environmental and social standards will be emphasized to reduce water consumption, minimize chemical pesticide usage, and improve soil health, promoting more sustainable and resilient cotton production.
Enhanced Market Access and Industry Growth
The partnership enables CEA to leverage Better Cotton's vast network of industry stakeholders, including brands, retailers, and textile mills committed to sourcing sustainable cotton. This enhanced market access will ensure fair returns for Egyptian cotton farmers and support the growth of the Egyptian textile industry.
CEA's Executive Director, Khaled Schuman, expressed enthusiasm about the collaboration, highlighting the potential for positive change in Egyptian cotton farming practices. The partnership aligns with CEA's vision to globally authenticate the legacy of Egyptian cotton.
Alan McClay, CEO of Better Cotton, echoed the sentiment, emphasizing the shared goal of making cotton farming in Egypt more climate resilient, environmentally friendly, and responsible. He looks forward to helping Egyptian cotton communities thrive while protecting and restoring the environment.
Driving Long-Term Viability and Ethical Textiles
Both Better Cotton and CEA are confident that this strategic partnership will contribute to the long-term viability and competitiveness of Egyptian cotton. Additionally, it will address the growing demand for sustainable and ethically produced textiles, paving the way for a more sustainable future for the Egyptian cotton industry.
Fashion for Good and FastFeetGrinded Revolutionize Footwear Recycling with Leading Brands
Written by FW
In a groundbreaking move towards a more sustainable and circular footwear industry, Fashion for Good has joined forces with major brand partners adidas, Inditex, Target, and Zalando, along with footwear recycling innovator FastFeetGrinded. The aim is to test and validate an innovative footwear recycling process that will promote the adoption of recycled materials in the footwear manufacturing sector.
Understanding the Need for Sustainable Recycling Technologies
Fashion for Good's Managing Director, Katrin Ley, emphasizes the significance of this project as a first-of-its-kind initiative in the footwear industry. The collaboration seeks to unravel the potential of sustainable recycling technologies and infrastructures that are crucial for accelerating the transition towards a circular future. By fostering collaborative partnerships, the initiative lays the foundation for scalable solutions to address the pressing environmental challenges faced by the fashion industry.
FastFeetGrinded's Unique Capability
FastFeetGrinded brings a distinctive capability to the table with its ability to deconstruct any type of pre- and post-consumer shoe into macro-components. These macro-components are then ground down into smaller, high-purity granulates, which serve as valuable raw materials for repurposing.
Driving the Recycling Revolution
The collaborative pilot involves diverting pre- and post-consumer footwear to FastFeetGrinded, where they will be transformed into various new material granulates. These granulates will be further utilized by FastFeetGrinded's extensive network of supply chain partners to create output products like outsoles, midsoles, and flip flops. The brands involved will meticulously assess the quality and purity of these products, showcasing the immense potential of FastFeetGrinded's footwear recycling technology and setting the stage for widespread adoption.
FastFeetGrinded's Crucial Role
As the demand for raw materials is projected to triple by 2050, there is an urgent need to reduce reliance on virgin resources. FastFeetGrinded, as a key recycling innovator, plays a vital role in providing the fashion industry with secondary raw materials, meeting the rising market demand, and complying with regulatory requirements for recycled content. The company's current 4000 square meter facility is already addressing this demand, with plans for global expansion underway.
With Fashion for Good's strategic partnership with leading brands and the expertise of FastFeetGrinded, the industry takes a significant step towards a more sustainable and circular future, where recycling and repurposing are at the forefront of footwear production. The project serves as a beacon of hope for reducing waste and minimizing the fashion industry's environmental footprint.
Shanghai hosts inaugural fashion gala
Amidst a changing economic landscape and complex international relations, the fashion industry is undergoing a transformative shift. In response, the global fashion community is actively uniting its efforts to ensure sustained growth in this new era.
Recognizing China's pivotal role in the fashion market, luxury titans and industry leaders have been flocking to Shanghai since its reopening after pandemic lockdowns, making it the gateway to showcase China's designer fashions to the world. As China's most economically potent city with a GDP of over 5 trillion renminbi ($694.4 billion), Shanghai is striving to solidify its position as a leading force in the global fashion industry.
Propelled by a vision of becoming a world-class design and fashion capital, Shanghai successfully hosted various international events despite the challenges posed by COVID-19, including Digital Shanghai Fashion Week and the fifth China International Import Expo. In line with this ambition, Shanghai is now launching the highly anticipated inaugural Shanghai Gala.
Organized in collaboration with WWD China, the Shanghai Gala aims to bring together renowned fashion designers, creatives, celebrities, government representatives, and diplomats from around the globe. The gala will kick off with a captivating red carpet event, followed by the opening of the "A New Vision of Design" fashion exhibition.
This exhibition, one of the highlights of the second World Design Capital Congress (WDCC), will provide a platform for leading designers worldwide to showcase their creations, including fashion works, graphics, manuscripts, and installations, under the themes "Heritage Fashion," "Contemporary Fashion," and "Fashion for the Future."
The Shanghai Gala serves not only as a platform for designers to connect with the local market but also as a space for industry decision-makers to exchange insights and expertise. As China enters a new era, Shanghai's rapid recovery and strategic push for growth in the fashion sector position it as a key city in China's quest to become a global fashion powerhouse.
The Shanghai Gala is seen as a pivotal step towards unlocking the industry's vast potential and fostering meaningful dialogues between the East and the West, celebrating the inspirations and creativity of today's leading fashion designers.
Hemp's Global Production: Sustainable Prospects
Hemp fiber emerges as a promising solution for a sustainable future, renowned for its strength, durability, and eco-friendly properties like UV resistance and resistance to mold, mildew, and rot. With lower input requirements compared to other fiber crops, hemp cultivation promotes biodiversity, attracts bees, and improves soil health.
The report, "Growing Hemp for the Future: A Global Fiber Guide" by Textile Exchange, sheds light on leading hemp fiber-producing nations, acknowledging data limitations. Despite fiber hemp production in 2021 being similar to 1961 levels, efficiency improvements on reduced land have resulted in higher yields.
However, concerns loom around pesticide and fertilizer use. While hemp is hardy, insect pests necessitate chemical intervention. Some countries have approved highly hazardous pesticides, and a lack of fertilizer guidelines leaves farmers uncertain.
Without proper restrictions and eco-friendly practices, hemp could become an input-intensive crop, leading to greenhouse gas emissions (GHG)and environmental contamination akin to cotton. Textile Exchange foresees a bright future for hemp, urging the industry to establish a sustainable production system.
Failure to preserve hemp's eco-friendly image may impact consumer interest, prompting a shift in demand. Securing hemp's sustainability is crucial for the environment and market viability.
1.5 Million Circular Jeans Launched
In the span of just two years, The Jeans Redesign initiative has witnessed a significant breakthrough in sustainable fashion, with participating brands successfully introducing more than 1.5 million pairs of redesigned jeans to the market.
These jeans are now durable, recyclable, traceable, and crafted using safe materials and processes. Remarkably, this number surpasses three times the volume achieved in 2021. Furthermore, a notable one-in-nine brands have undertaken substantial efforts, redesigning at least 40% of their entire jeans portfolio.
Through collective efforts, the project participants have achieved profound insights into creating a circular economy not only for jeans but for all types of garments. By identifying solutions and addressing barriers and innovation gaps, they are paving the way for a more sustainable future. The findings indicate that 72% of participants have effectively overcome design challenges, aligning their jeans with the outlined guidelines for a circular economy.
However, the report emphasizes the necessity of systemic change to unlock the full potential of redesigning products. Beyond jeans, the initiative's positive impact extends to other garments, with more than a third of participants successfully applying circular economy principles to various clothing items such as jackets, shirts, tops, and accessories.
As the circular design becomes increasingly feasible, the focus must shift towards transforming the entire fashion system.
The report suggests that by learning from The Jeans Redesign and implementing the insights gained, businesses and policymakers can foster the necessary conditions for change across the fashion industry. The future of sustainable fashion is within reach, and with continued efforts and collaboration, the circular economy for fashion can become the norm, rather than the exception.
Sustainable Egyptian cotton production enhanced
Better Cotton, the world's largest cotton sustainability initiative, and Cotton Egypt Association (CEA), the organization responsible for promoting and protecting Egyptian cotton worldwide, have forged a new strategic partnership aimed at expanding the Better Cotton program in Egypt.
Initially launched in 2020 by the Egyptian Cotton Project, implemented by the United Nations Industrial Development Organization (UNIDO) and funded by the Italian Agency for Development Cooperation and International Islamic Trade Finance Corporation (ITFC), this collaboration aims to bolster the sustainability and quality of Egyptian cotton production while ensuring fair working conditions for farmers.
Egyptian cotton's global renown for its exceptional quality, softness, and durability dates back to the 19th century, making it a symbol of luxury and excellence in the textile industry. However, in recent years, challenges such as climate change, water scarcity, and fluctuating market demands have posed significant threats to its sustainability. In response to the pressing need for proactive measures, CEA has joined forces with Better Cotton in Egypt.
Through this renewed partnership, both entities will work together to expand the adoption of sustainable farming techniques, provide comprehensive training and support to farmers, and ensure compliance with stringent environmental and social standards.
These practices will help Egyptian cotton farmers reduce water consumption, minimize chemical pesticide usage, and improve soil health, leading to more sustainable and resilient cotton production.
Additionally, the collaboration will enable CEA to leverage Better Cotton's extensive network of industry stakeholders, including brands, retailers, and textile mills committed to sourcing sustainable cotton.
This access to a broader market will ensure fair returns for farmers and bolster the growth of the Egyptian textile industry. This collaboration aligns perfectly with our vision to globally authenticate the legacy of Egyptian cotton.
Both Better Cotton and Cotton Egypt Association are confident that this strategic partnership will contribute to the long-term viability and competitiveness of Egyptian cotton, while also addressing the growing demand for sustainable and ethically produced textiles.
Swimwear market to hit $30.9B by 2032
The swimwear market, valued at $19.8 billion in 2022, is anticipated to surge at a CAGR of 4.5% from 2023 to 2032, reaching a substantial $30.9 billion, according to a report by Allied Market Research. Swimwear serves not only as functional attire for water-related activities but has evolved into a fashion statement.
Women's swimwear, dominating the market, showcases bold colors, asymmetric designs, African and geometric prints, and modern silhouettes. High-end brands are gaining popularity as they offer trendy prints and convenient cuts that enhance the slimming effect, appealing to consumers seeking both style and functionality.
The report highlights the expanding demand for men's swimwear, which has become suitable for sports and casual wear. Notably, vendors are expected to introduce new product lines and innovations to cater to this growing trend and attract new consumers.
Regionally, Asia-Pacific is projected to witness the highest growth rate, registering a CAGR of 5.4% from 2023 to 2032.
As India’s readymade garment exports continues to fall, it loses share in important markets Report
Wazir Advisors July 2023 report ‘Apparel Trade Scenario in Key Global Markets and India’ reveals the scenario hasn’t changed much since the previous report released in June 25. The June 2023 figures indicate India’s apparel exports was at $1.2 billion, which is 20 per cent lower than June 2022. On YTD basis, exports are 14 per cent lower than in 2022. Between January and May 2023, US has remained the largest importer with 31 per cent of all Indian RMG exports; the UK with 10 per cent and the UAE with 9 per cent.
In the first five months of 2023, India’s export to the UAE has dipped by 5 per cent since 2021 but there are seven more months to go. Similarly, India registered a 1 per cent increase in its share in the US and UK the first five months of 2023. India’s exports to Germany and France have remained steadfast at 6 per cent and 5 per cent respectively. The Wazir report takes stock of April, May and June 2023 trade stats. Apart from reporting on imports and retail level performances in the US, EU, UK and Japan, the report also provides analysis of India’s RMG sector’s performance.
Given India’s falling export graph, a look at why India is not faring well in some traditional markets.
Indian RMGs fall from grace in the UAE
After the Comprehensive Economic Partnership Agreement (CEPA) between India and the United Arab Emirates was signed in May 2022, it was speculated that India’s trade with the Middle-East country will get a boost. Indeed it did as per the government’s statements. Gems, jewellery, sugar confectionery, cereals, and electrical machinery have noted a significant rise in the UAE market after the implementation of CEPA but for inexplicable reasons, the readymade garment sector did not benefit much. In terms of readymade garment export destinations, the UAE has fallen to the third position while the UK now takes up second spot. The UAE’s decline in importing readymade garments from India is hurting local exporters as they are facing low to negative growth elsewhere as well. Once the second largest supplier of readymade garments to the UAE after China, India has been elbowed out by Bangladesh. The economic conditions in the UAE at the moment are better disposed towards larger volumes of basic, cost-efficient clothing that Bangladesh is an expert at.
India’s negligible presence in Japan’s import basket
Japan is another case in point as the third largest importer of readymade garments. On an average, the country imports apparels worth of $24 billion. In this collective, India has only managed to capture a tiny 1 per cent share, despite excellent bilateral trade relations with Japan and the fact that India and Japan have had a bilateral trade agreement since 2011 whereby duty on importing Indian apparel is zero.
Moreover, India excels in manufacturing base for cotton, and cotton based knitwear, and has good chances for market penetration as demand for such items is high in Japan. Then what is the reason for Indian apparel exporters to underperform in such an important market? However, as late as 2022, Indian apparel exporters performed remarkably well in South Korea, seeing an increase of 51 per cent.
Taking into account the statistics in the report, it could well be said Indian exporters should take a leaf out of Bangladesh’s playbook and focus on the Far East as new markets to leverage growth opportunities.
EU’s RMG imports recover, US, UK continue to remain low importers Wazir Advisors
Wazir Advisors July 2023 ‘Apparel Trade Scenario in Key Global Markets and India’ study that covers the three months of April, May and June 2023 highlights global trade in readymade garments (RMG) hasn’t really changed since the last report that was released in June 2023. The report which covers four of the largest readymade garment importers: US, EU collective, UK and Japan reveals, Japan is the only country out of the four that continues to increase import of readymade garments while the EU has turned its import quantities around in June, gaining an increase of 1.6 per cent year to date, and 4 per cent in April 2023. The decrease in import of RMF continues in the UK and US.
It may be noted the Wazir Advisors report publishes import, physical retail and online retail scenarios of these four countries, month after month and the July report highlights the current trends in these markets.
RMG imports recovers in the EU
The EU’s apparel imports in April 2023 increased by 4 per cent compared to April 2022. The April 2023 imports were valued at $7.8 billion. On YTD basis, imports were 1.6 per cent higher than in 2022. In the EU market, Bangladesh's share witnessed an increase of 4.5 per cent from 2022 and, China’s share decreased 7.4 per cent.
As retail shines in the US, imports still lag
In June 2023, the US’ monthly apparel store sales were estimated at $18.4 billion, 6 per cent more than in June 2022. On YTD basis, sales were 6 per cent higher than in 2022. E-commerce growth was not as significant - in Q1 2023, online sales of clothing and accessories registered a growth of 2 per cent over Q1 2022 and were 32 per cent lower than Q4 2022 sales. This is, explained by the fact that the fourth quarter of every year is the peak of festive sales. The report indicated mixed fortunes for home furnishings in June 2023. US monthly home furnishing store sales are estimated to be $5.1 billion, which is 2 per cent lower than in June 2022. However, on a year-to-date basis, sales were 1 per cent higher than in 2022. The downward slide of imported RMGs now stands at a negative 20 per cent, year-to-date.
Japanese buyers remain steady in RMG imports
In April 2023, Japan’s apparel imports were $1.8 billion, 6 per cent higher than that in April 2022. In a reversal of fortune since the last Wazir report, Vietnam’s share decreased by 7.2 per cent and China’s share declined further 1 per cent, bringing the total to a decline of 8 per cent compared to 2021. Between January and April 2023, China was the largest supplier of apparel to Japan, still holding on to more than half of the total imports, at 51 per cent. Vietnam in that period supplied only 16 per cent whereas Bangladesh and Cambodia supplied 6 per cent and 5 per cent respectively.
UK imports continue to fall
UK apparel imports in May 2023 were $1.6 billion, which is 24 per cent lower than in May 2022. On YTD basis, imports in 2023 are 17 per cent lower than in 2022. In the first five months of 2023, China has only 16 per cent market share, equaling that of rival Bangladesh. So far down 2023, Italy and India have gained 1 per cent each, standing with market shares of 8 per cent and 7 per cent respectively.
On the other hand, in physical retail, May registered monthly apparel store sales were £3.8 billion, which is 6 per cent higher than in May 2022. On a year-to-date basis, sales were 11 per cent higher than in 2022. On the e-commerce front, the first quarter of 2023 fared better than the first quarter of 2022 by 13 per cent.
More...
Increasing urbanisation to drive yarn market growth at 5.1% CAGR
The textile yarn market is set to grow robustly from USD 14.4 Billion in 2023 to USD 18.5 Billion by 2028, with a CAGR of 5.1% during the forecast period, driven by increasing global population and urbanization.
Urban migration fuels the demand for textiles and, consequently, textile yarns. Cotton yarn dominates the plant yarn segment and is expected to hold the largest share in 2023 due to its popularity in the clothing industry, particularly for comfortable and breathable garments like t-shirts, jeans, and dresses.
The home textiles segment is rapidly growing, enhancing residential spaces with bedding, curtains, towels, and rugs, utilizing textile yarns as essential components in production. China is expected to lead the Asia-Pacific market in 2023, benefitting from its established textile industry, cost-effective production capabilities, and abundant raw materials.
The future of textile yarn is driven by sustainability and advanced technologies. Eco-friendly fibers like organic cotton, bamboo, and recycled polyester gain momentum, reducing the industry's carbon footprint. Advancements in eco-efficient processes, such as waterless dyeing and energy-saving methods, aim to minimize resource consumption during yarn manufacturing.
Innovative yarns like UHMWPE and conductive yarns revolutionize various industries, from aerospace to wearable technology. Smart textiles integrate conductive yarns and microelectronics for interactive fabrics with applications in sports, healthcare, and consumer electronics. Customization and personalization thrive with digital manufacturing and additive technologies, allowing tailored yarns to meet specific design requirements.
In conclusion, the future of textile yarn lies in sustainability, performance, and technological innovations, offering eco-friendly and high-performance textiles with intelligent functionalities to embrace a more advanced and sustainable future.
Srilanka: JAAF urges increased export quota for India
The Joint Apparel Association Forum (JAAF) stressed the need to exceed the current export quota in the India-Sri Lanka Free Trade Agreement (ISFTA) for apparel to gain significant benefits. Presently, Sri Lanka can export eight million pieces of ready-made apparel to India without duties, but the JAAF desires a wider allowance to tap into extensive trade opportunities for both nations.
The apparel sector faces challenges with a 20 percent decline in textile and apparel exports, mainly due to reduced demand in primary export markets. JAAF believes that India, as a close trading partner, could offer a lifeline to Sri Lanka while benefiting Indian fabric manufacturers. As Sri Lanka recovers from its worst economic crisis since independence, the role of merchandise exports becomes increasingly crucial.
Since the ISFTA's implementation, Sri Lanka's export trade surged from US $47 million in 1999 to US $815 million in 2021, facilitating the promotion of a diverse range of products. Despite these successes, the eight million export quota hinders the apparel industry's full potential under the ISFTA.
Sri Lanka's imports from India also exceed its exports, leading to a trade imbalance. This restricts Sri Lankan exporters from negotiating substantial orders with Indian buyers. JAAF welcomes the ongoing FTA talks between India and Sri Lanka and remains optimistic about the mutual benefits. While awaiting the FTA's finalization, the JAAF urges the removal of the eight million-piece quota to bolster apparel exports to India.
The association stresses the importance of flexible trade arrangements amid global market conditions, decreased demand, and the prevailing economic crisis in Sri Lanka.
Indian Textile Minister's Vision: $250B Textile Ascent
Piyush Goyal, the Minister of Textiles, Commerce, and Industry, is at the forefront of an ambitious vision for India's textile sector, aiming to achieve a momentous $250 billion in textile production and $100 billion in exports by 2030.
To chart the course towards this goal, Goyal led the visionary roadmap discussion at the Chintan Shivir event, which took place on July 18, 2023, bringing together officials from across the country for a collective brainstorming session to address the challenges facing the industry.
During the event, Goyal placed significant emphasis on the necessity of an integrated approach and institutional reforms to enhance the sector's global competitiveness. The discussion delved into several pivotal themes, including strategies for boosting exports, attracting increased investments, scaling up operations, ensuring sustainability, and navigating the transition from natural to man-made fibers.
In her address, Darshana Jardosh, the Minister of State for Textiles, highlighted the textile industry's vital role in India's economic growth and called for concerted efforts to nurture all segments of the value chain.
With the firm determination and innovative solutions generated at the Chintan Shivir, India's textile sector endeavors to embark on a transformative journey towards unparalleled success.
Pakistan’s textile sector faces headwinds as the country copes with economic instability
Pakistan’s exports share in the international market has dropped to 1.76 per cent due to expensive electricity. As per APTMA, textile exports dropped to $35.21 billion in FY2022-23 compared to $39.59 in FY2021-22. Moreover 50 per cent production capacity of textile mills is not being utalised and with high electricity rates exports are expected to move down even more.
Passing through tough times
The world is witnessing Pakistan’s ongoing battle to save itself from financial default, despite a $3 billion IMF loan to be received in installments, followed by loans from Saudi Arabia and the UAE. The nation is struggling with record inflation, high energy prices, severe forex liquidity crisis that’s stalled imports, continuous political upheavals. This has hit manufacturing sectors including the textile industry hard.
This financial year, saw a massive decline in textile exports of almost 15 per cent valued at $2.8 billion. To make matters worse, as the government and opposition continue their stand-off, so, intervention through quickly-implementable policies are nowhere in the picture. In this scenario, Bangladesh has seized the opportunity and lured many Pakistani textile manufacturers to its cost-friendly, professional and productive shores. Bangladesh has the added attraction of providing tax-free access to RMG and textiles to 37 countries.
Devaluation didn’t help, instability made it worse
The country’s economic think-tank had advised a devaluation of Pakistan’s Rupee to boost exports. However, as the devaluation happened on the back of a severe economic crisis and not in a planned manner, it backfired. As export-oriented textile sector is reliant on import of raw material, machinery and parts, things started falling apart when the country’s central bank gave directives to all commercial banks to stop issuing LCs due to a crucial forex shortage.
The blow was hard and forced many to stop operations and some to operate at half or quarter of their productivity level. Moreover, with a devalued currency, importing became expensive, shooting overheads up and pricing therefore, becoming non-competitive. What made it worse was the complete lack of stabilizing policies to spearhead a growth of 25 to 40 per cent. The industry has been waiting hopelessly since 2014, as two successive five year policies lie in cold storage and banks hiked borrowing rate to 22 per cent.
Lack of raw material another letdown
Lack of fiber, cotton and PSF have reduced or closed operations of many factories as both these fibers were to be imported in large quantity in an environment where LC’s were not being opened or honored. This brought to focus the urgent need for establishing a reliable local supply of cotton and PSF to avoid such situations in future.
Pakistan’s cotton farming, which is crucial to the textile industry, faces daunting challenges due to climate change, rising temperatures, unpredictable rainfall, and water scarcity resulting in lower crop yields and diminished quality. Result: cotton production and productivity has reached a 40-year low. This not only jeopardizes farmers’ livelihoods but also threatens sustainability and profitability of the entire textile industry. When the situation was at its lowest, the floods of 2022 destroyed vast amounts of cotton crop. In fact, amongst cotton-producing countries, the yield per hectare is one of the lowest in Pakistan.
Absence of working capital
Meanwhile, the withdrawal of zero-rating (SRO 1125) and the imposition of an 18 per cent GST on export-orientated sectors have had a negative impact, especially now that the FASTER system is not working and refunds are held up. The higher cost of doing business, unsustainable working capital levels, higher interest rates, and currency depreciation have formed obstacles for new projects and export expansion. High-borrowing rates and banks being stringent in loan approvals, working capital has reached scarcity levels.
The government has to take a step back and begin implementing the 2020-24 policies which includes cotton farming, energy supply and price control as well as look outward to guarantee investors a safe haven.
