Six major sub-sectors: some 30 percent textile industry capacity virtually ends

Some 30 percent of the textile industry capacity in all six major sub-sectors is almost closed due to multiple reasons, including energy supply mismanagement, comparatively high cost of energy, losing market access, no investment, country perception, policy and implementation divide, etc, said Tariq Saud, Chairman All Pakistan Textile Mills Association (APTMA).
He said the closed 30 percent of the production capacity has a potential textile exports worth some $3.467 billion. "Due to under-performance of Pakistan textile industry, Pakistan's share in global market has also decreased from 2.2 percent to 1.8 percent during 2006 to 2013, whereas the market share of regional competitors has enhanced by 75 percent (from 1.9 percent to 3.3 percent) for Bangladesh, 35 percent (from 27 percent to 37 percent) for China and 35 percent (from 3.4 percent to 4.7 percent) for India, respectively. If the situation remains the same, it is apprehended that Pakistan would be out of the list of exporting country of textile items," Chairman APTMA added.
He further said that owing to high cost of doing business for textile industry in Pakistan, domestic market is flooded with smuggled, subsidised and dumped imports of textile and clothing items.
Tariq Saud said the custom duty on import of cotton yarn in Pakistan is 5 percent whereas India has imposed 28 percent duty on yarn import making export of yarn to India from Pakistan unviable. As a result, a number of textile mills have closed down their operation at the cost of Indian incentives for its textile industry. He said the Indian government has provided investment incentives under the Technology Up-gradation Fund Scheme besides other incentives to their textile industry to the tune of $66 billion whereas not a single notification in connection with Textile Policy 2014-19 has yet been issued. Moreover, the incentive payments against Textile Policy 2009-14 are still not paid.
Chairman APTMA said the government has imposed Gas Infrastructure Development Cess (GIDC) on the textile industry for the captive and processing use. The government has increased gas prices for the captive and general industry. Due to the levy of GIDC and increase in gas tariff, cost of gas for industry has been increased to 6.7$/MMBTU as compared to India $4.2, Bangladesh $3.1 and Vietnam $4.2/MMBTU.
"APTMA had clarified to government policymakers that Pakistan's textile industry could never compete with the Indian industry because of the high cost of doing business which led to the closure of number of mills. Thousands of workers would be laid off. APTMA has engaged the government since August but no tangible relief has so far been announced. "We've met the federal finance minister in August followed by a detailed meeting with the Prime Minister in September. The announcement of a textile package has already been too late and fears are mounting that it could also be too little," he added.
Saud urged the government to withdraw electricity surcharges for textile industry on independent feeders, provide regionally competitive electricity tariff @ Rs 9 per kWh, withdraw GIDC and recent increase in gas tariff, impose 25 percent duty on import of textile & clothing, zero rate export oriented textile industry by providing drawbacks @5 percent against export of yarns, fabrics, made-ups and garments, long-term financing scheme of SBP to ginning and spinning sub-sectors, release pending refunds.