The recent increase in petroleum products' prices is set to scale down the already downsized output of the cottage industry of the country with the fears of 40 percent rise in cost of production, said industrialists on Thursday.
Talking to Business Recorder the small manufacturers blamed the government's inapt policies leading to the closure of cottage units in the county by some 45 percent because of power shortage, violence, high electricity tariff and unrestricted Chinese products on the local markets.
They were of the view that the continued hike in the petroleum products' prices shot inflation significantly in the country and made every product costlier, saying the small-scale manufacturing units were the most affected one to compete with the Chinese items on its own markets.
"Chinese government has made electricity free of cost to its all sort of manufacturing units whereas the industries in Pakistan are facing huge power tariff and energy shortage," they said, adding, "then how the local cottage industry could compete with the imported cheap Chinese products."
President, Organisation of All Pakistan Small Traders and Cottage Industry (Karachi chapter) Mehmood Hamid said the increase in petroleum products' prices had badly hit the home-based small manufacturing units, as cost of production surged and hours of operations reduced for want of electricity.
He said the increase in fuel prices was likely to steer the transport fares upward, as a result the labourers would demand rise in their wages while the existing cottage units were unable to perform up to the mark due to shortage of electricity and its high rates.
As a result, he feared, "these ailing units will resort to retrenching the labourers to lead to a mass unemployment," saying that the large scale units were also faced with power shortage and such a negative impact would hit the country's exports.
He said the decline in exports would further widen the trade deficit and the country's chief exports particularly the textile ones were feared to lose its competitive advantage to other key players on the global markets. "The export reduction will ultimately decrease earning of foreign exchange," Hamid opined. It may be mentioned here that violence in Karachi had already crippled the industrial production and reduced the trade and business activities, as traders said their business losses had reached over Rs 20 billion during the last 15 days.