Arsalan Ali

Pakistan’s textile industry faces a plethora of issues that are impeding its growth and sustainability, said Amjad Hussain, Manager Sadaqat Textile Mills Limited, Faisalabad, while talking to WealthPK. According to Amjad, the high energy crisis has been a persistent problem for the businesses in Pakistan for several years, with the increased tariffs on electricity and gas making it difficult for the textile sector to operate profitably.

This issue is particularly acute in the textile industry, which is heavily dependent on energy-intensive processes, Amjad pointed out. “The regionally competitive energy tariff of Rs19.99/kWh notified till June 30, 2023, has been withdrawn effective March 1, 2023, leading to a decrease in the competitiveness of our textile products in the global market besides impacting their export,” said Amjad.

According to the data from the Pakistan Bureau of Statistics, textile exports stood at $1.2578 billion in March 2023, marking a 22.61% decline from $1.6252 billion in the same month of the previous year. Furthermore, during the first nine months (July-March) of the current Fiscal Year 2022-23, textile exports stood at $12.4765 billion compared to $14.2426 billion showing a decrease of 12.40%.

“Banking issues, particularly delays in payments, have also caused problems to the manufacturing industries/textiles. This is partly due to the cumbersome regulatory environment and slow approval process of the State Bank of Pakistan for import transactions,” Amjad explained.

According to him, the high number of shipments stuck at the port is another issue that has affected the textile industry. The textile sector is heavily dependent on exports, and any delay or disruption in the shipping process results in significant production losses, he said.

“Fluctuations in the exchange rates have made it difficult for the businesses to plan and budget effectively. This instability makes it difficult for the businesses to compete in the global market because the imported raw materials increase the input cost,” he said. “Shortage of dollars in the domestic markets has made it difficult for the businesses to access the foreign currency they need to operate. This has led to rupee devaluation, making imports more expensive and exports less competitive,” he said.

Amjad said availability of energy/gas at regionally competitive rates and stability in the exchange rate would significantly aid in increasing the textile exports. Omer Farooq Sheikh, CEO of Sheikh Private Limited, a local textile manufacturer in Faisalabad, told WealthPK that inflation, political instability, uncertainty, and foreign exchange instability are significant factors seriously impacting the textile industry.

Credit: Independent News Pakistan-WealthPk