Crisis deepens in Pakistan Textile sector

Energy crunch and rising costs in Pakistan

GMT 08:13 2015 Monday ,18 May

Sriyadithatextile - Energy crunch and rising costs in Pakistan

Pakistan Textile and Clothing industry
Courtesy Google

 

“Pakistan is no longer in the race for a bigger share in the global textile business. Even our domestic market has been stolen from us by China and India. We’re just struggling to survive and save our jobs,” muses Gohar Ejaz, a textile business leader. “It is painful to see factories built by three generations facing an imminent threat of extinction on a very large scale because of the government’s policies.”

Around one quarter of the total installed capacity across the textile chain has already shut down, mainly because of the energy crunch and rising costs. The production capacity impairment in the spinning sector — at 30pc — is estimated to be higher than the industry’s average.

The differential between the peak export revenues fetched by different sub-sectors and the value of their present overseas shipments stands at $3.3bn — or equal to the closed capacity — owing to falling export quantities.

Pakistan’s yarn producers, for example, were much more efficient and modern in 2006 than their Indian competitors. Today, the conversion cost of 20 carded and 30 combed yarns in Pakistan is respectively 33pc and 27pc higher than those in India.

As if that is not enough, the Indian government has consistently supported its textile exports through rebates, subsidies and timely policy responses to their issues, protected its domestic market, and given huge incentives to encourage investments in new machinery and capacity.

India spent $3.5bn between 2007 and 2012 on its textile industry to add 14m spindles, 36,000 shuttles and jet air looms, grow exports by $16bn, create 16m jobs, and increase its share in the world textile trade from 3.5pc to 5pc.

Pakistan, on the other hand, spent less than $300m during 2009-14. Consequently, its exports have stagnated, jobs lost and machines rusted.

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