Pakistan is the 4th top producer of yarn and amongst the top 5 producers for cotton globally. It also is the largest industrial sector employer, has very strong poverty alleviation linkages, contributes 8.5% of GDP and is the largest industrial taxpayer.

Although textile sector has been the largest contributor to Pakistan’s economy, It could have done much more and provided the solution to our perennial balance of payments problem. Due to faulty policies over the last ten years cotton crop has fallen from 13.5 Million bales to 8.5 Million bales while India’s crop has increased from 10 Million bales to 40 Million bales. Similarly exports in all our competing countries, Bangladesh, Vietnam and India have seen an average increase of over 60% while Pakistan’s Exports have remained stagnant at $ 13 Billion.

It is about time that we broke out of this vicious downward spiral, by providing the right framework and policies increase our cotton production to 20 Million bales through acquisition of seed technology and double textile exports to $25 Billion over the next 4 years.

This will require billions of dollars in investment and technological upgradation and expansion throughout the sector.

Prime Minister Imran Khan initiative of providing regionally competitive energy has allowed the sector to increase volumetric exports by 30 % in the last 18 months eliminating the impact of reduced international prices. The provision of regionally competitive energy must be continued for the entire value chain while eliminating the multiple taxes in the segregated sector. Essentially this requires implementation of recommendations of the in principle approved textile policy

The Sales Tax system must be also be reconsidered as the current 17% Tax involves a huge amount of capital (upto 5 months of refunds) to be stuck in the system while providing large incentive to smuggle, under invoice or cheat the system. Lowering the tax rate to 5% will allow the sector much needed breathing space and for our homegrown retailers to compete in the domestic market, reducing imports/cash outflows. A dollar saved is a dollar earned.