LAHORE: Textile exports to the European Union (EU) are expected to surge by up to $1bn a year as the 27-nation bloc granted the much sough-after Generalised System of Preferences (GSP) Plus status to the country, effective from Jan 1, 2014.

Though the brighter prospects of raising exports to the EU market after the grant of duty-free and preferential duty rate access on 3,500 products have buoyed the businesspeople – particularly the textile and clothing exporters in Punjab – growing energy shortages remain a major impediment. There will be no gas for the captive power plants (CPPs) of the province all through the winter.

“The EU trade concessions can push our textile exports and generate significant economic activity,” said Sheikh Mohammad Ilyas, the chairman of Faisalabad-based Pakistan Textile Exporters Association (PTEA), on Wednesday.

“But much will depend on regular availability of regular supply of gas and electricity to operate factories,” he said.

At least 40pc of the installed textile capacity in Punjab, where 75-80pc of total manufacturing capacity is located, remains inoperative because of energy shortages, according to the industry.

Pakistan’s textile exports to EU markets draw 11pc duty at present. This makes it difficult for the country to compete countries like Bangladesh, which has pushed its textile exports to over $25bn after getting GSP Plus status from the EU.

All Pakistan Textile Mills Association (Aptma) Punjab chairman S.M. Tanveer hailed the EU trade concessions, saying the textile industry could maximise benefits of the scheme. But, he said, the government would have to fulfil the energy needs of the textile industry to ensure level-playing field against competitors.

He said the Aptma hoped to double the textile exports to $26bn in four years.

Textile exports of $13.1bn in the last fiscal year were 53pc of the country’s total exports of $24.6bn. The EU imported almost 27-30pc of Pakistan’s total exports during the period.

Bilal Qamar, an analyst at JS Research in Karachi, said that under the new trade concessions, almost 20pc of Pakistani exports would be allowed to enter the EU at zero tariff and 70pc at preferential rates.

He noted that textile made-ups, home textiles, etc – which lead other textile products imported by the EU from Pakistan – will be the immediate beneficiaries of the concessions.

According to the PTEA, the country exports $5bn worth of yarn, plain and dyed fabric to different countries which, in turn, add value and re-export to the EU.

“The domestic textile industry is likely to take the benefit of adding value itself and increase direct exports to the EU after GSP Plus status,” said the analyst.

He projected the textile exports to rise by 3pc above the target of $14.2bn for the current fiscal year to $14.6bn and by 5pc to $16.3bn during the next financial year.

The Lahore Chamber of Commerce and Industry said the GSP Plus concessions would help boost the country’s exports and create around one million jobs for Pakistani youth.

In a statement, LCCI President Sohail Lashari said exporters from various industries were anxiously hoping to access the European markets, which promised huge potential for multiplying the country’s exports.