KARACHI: Exporters fear more declines as the textile sector, which accounts for over 60 per cent of the country’s overall export earnings, is not getting fresh orders while India is aggressively lobbying for GSP+ status which could replace Pakistan in the European market.
“We are not getting new orders for exports. We are working on orders in the pipeline which means the coming months will see a sharp decline in overall exports,” warned Jawed Bilwani, Vice-Chairman of Businessmen Group and a leading textile exporter.
He said textile exports declined by 14 per cent in FY23, which means an identical decline in production, jobs, and allied industries.
“There are growing fears about the discontinuation of the Export Refinance Scheme after a Stand-By Arrangement reached with the IMF as the government is trying to abolish the subsidised financing for the export sector,” he deplored.
Indian move to get GSP+ endangers $8bn exports to Europe
The State Bank of Pakistan (SBP) has already reduced the gap between the policy interest rate and export refinance to 3pc from the earlier 5pc. The current policy rate is 22pc which means exporters will have to pay about 19pc markup.
Exporters said this rate is already very high compared to competitors while the increased cost of electricity has paralysed the industry.
“The government must understand that exporters need cheaper inputs to compete on the international market. This will earn foreign exchange to save the country from sovereign default,” said Aamir Aziz, an exporter of textile finished products to European countries.
He said the exporters were highly concerned that India was making efforts to get the EU’s GSP+ plus status. “If succeeds, it will erode exports to Europe which is the biggest destination for Pakistani goods, he added.
Mr Bilwani, however, regretted that the government had not made any effort to fail the Indian move. “Pakistan is nowhere in competition with India but a GSP+ status means loss of over $8bn European market to New Delhi,” he feared.
“It will not affect Bangladesh since the cost of doing business there is too low compared to Pakistan,” he added.
Indian prime minister in his recent US visit met chiefs of Wall Mart and Amazon to market Indian products, inviting investors to his country and get maximum benefits for their exports.
Recently, a top Pakistani exporter had to face an odd situation when newly appointed Indian procurement in-charges of Nike and Levis stopped procurement from Pakistan and started procurement from India leaving the Pakistani company in shock.
The company lost a business of over $300m.
“If India succeeds in its effort to get the GSP+ status, Pakistan will have no chance to compete with India and Bangladeshi products,” warmed Mr Bilwani.
Published in Dawn, September 5th, 2023
