LAHORE, April 9: Pakistan is fast losing its share in the global knitwear market because of higher cost of production since the abolition of textile quotas under the WTO regime from January this year.
“Knitwear exports from our regional competitors — Bangladesh, Sri Lanka, China and India — have picked up dramatically because their exporters are getting ‘hidden subsidies’ from their respective governments,” Pakistan Hosiery Manufacturers Association (PHMA-North) Chairman Adil Butt and leading knitwear exporter M.I. Khurram told a press conference here on Saturday.
They said the Chinese exporters were given 13 per cent subsidy and the Indians 10 per cent. “Chinese knitwear exports are about 25 per cent cheaper than Pakistan. Similarly, Indians are 15-16 per cent cheaper than Pakistan. Same is the case with Bangladesh and Sri Lanka,” they added.
They pointed out that besides getting subsidies in one form or the other, their competitors from the region also enjoyed duty free access to the European market. “For instance, both Bangladesh and Sri Lanka enjoyed duty free access to EU countries. Sri Lanka may also obtain duty free access for its knitwear exports to the US in the next one year. This compares to 10 per cent duty on the Pakistani knitwear exports to the EU and 20 per cent to the US.”
In the quota-free world, they said, the buyers were not forced to make their purchases from Pakistan. “They will go to the countries that are offering them cheaper prices. If we don’t slash our prices, the buyers would not come to us. It would result in a loss of market share,” Mr Khurram said, adding the importers were asking for 15-20 per cent reduction in the prices.
They said knitwear exports from Bangladesh had grown by 47 per cent during February this year over the same period last year. Similarly, India increased its exports by 33 per cent in January over the same period the previous year, while China’s exports to the US grew by 147 per cent and to the EU by 188 per cent in February over the same period in 2004.
“In this scenario, it has become very difficult for us to stay in the international market and compete with the countries that are offering cheaper rates to importers,” they added.
They said if the government did not take remedial measures to save the knitwear industry from what they called unfair competition Pakistan could lose a big share in the global market resulting in the closure of 60-70 units and loss of over 300,000-350,000 jobs.
Mr Butt said about 50 per cent knitwear units had already been shut down because of the prevailing situation and resulted in the loss of 250,000 jobs across the country.
“A special cabinet committee formed by the prime minister some time ago had already recommended that the government should allow six per cent subsidy or rebate to the knitwear industry,” they said. “We’re hoping that the government would take final decision on this recommendation and announce the required relief at the earliest so that the industry could again stand on its feet.”