The textile industry will have to suffer power shortfall of 700 MW till March 2008, while 5.56 percent additional gas tariff has added further to the cost of production, official sources told Business Recorder here on Monday.
The textile industry is already finding it difficult to cope with power interruption, and 5.56 percent increase in gas tariff increases its problems. Things are not moving in the right direction as the industry will have to face 700 MW power shortage till March, 2008, they said.
Sources said that according to estimates these problems would curtail the export target for 2007-08 by 13.65 percent. The contribution of Pakistan to USA import is just 4 percent of the total. "Total imports of the United States are around $100 billion whereas our share is just $4 billion. Our increasing cost of production and the poor quality have raised our prices by 12 percent as compared to the regional competitors. That is why the country is losing its share in the international textile market", sources added.
Bangladesh, whose textile exports target for the current fiscal year is $9 billion, is earning more in international market than Pakistan. It enjoys 'zero' percent rate of duty on its imports in EU market, being least developed country.
"Moreover, our cost of production is 30 percent more than that of Bangladesh and the gas prices there are 50 percent less than that of Pakistan." In this connection, the best way to reduce the cost of production is to subsidise the gas tariff to almost 20 percent they said. The cross-subsidy of 30 percent is immensely harmful for industrial growth in Pakistan, as a handful of industrial users bear the burden of subsidy to 165 million domestic consumers. This policy of the government renders the export-oriented industry uncompetitive in the international markets.
According to the government, the Trade Policy 2007-08 will benefit not only the textile industry, but also the economy as a whole. In principle, the policy aims to boosting export of textile products to $17 billion in the next five years from the current $10.8 billion. However, considering the current crisis the textile industry is passing through nowadays, no doubt would affect the textile export for the year 2007-08.