Industry on path of growth

The textile export industry of Pakistan has entered the phase of sustainable growth and businessmen from the sector are aiming to fetch over $21 billion in fiscal year 2021-22 however, few hurdles have slowed down the pace of expansion and they might restrain the segment from achieving its goal.

Stakeholders from the sector have urged upon the government to take immediate remedial measures because any delay in taking action will reverse all the efforts of the businessmen and halt the growth momentum.

In a statement on Monday, Pakistan Textile Exporters Association (PTEA) Chairman Sohail Pasha said that exports of Pakistan experienced rapid recovery following elimination of Covid-related restrictions.

“Our outbound shipments surged faster than those of our regional competitors including Bangladesh and India,” he said. “Textile exports surged 26% year-on-year to $9.38 billion in the first half of fiscal year 2021-22.”

However, he voiced fear that the ongoing economic crisis, hike in manufacturing expenses, energy issues, low financial assistance, rising prices of raw material and lack of investment are some of the factors which might arrest the growing trend, added Pasha.

While highlighting the core issues, he said that the cash crunch had squeezed the financial streams of exporters as major portion of their working capital was stuck with the government while businessmen were awaiting receipt of their due refunds.

Detailing further, he said that around Rs365 billion worth of liquidity was stuck in form of sales tax, duty drawback and income tax refund while Rs85 billion were pending under the schemes announced to incentivise the textile sector.

According to him, due to persistent uptrend in commodity prices and growth in exports, working capital requirement had drastically increased for many sub segments of textile sector.

He elaborated that input cost of home textile factories had surged 31% while knitted garments segment was witnessing 41% rise in raw material cost.

“However, banks remain hesitant to extend new credit lines despite the phenomenal performance of the industry,” he lamented. “Inadequate funding under Export Refinance Facility has added fuel to the fire.”

PTEA’s Patron-in-Chief Khurram Mukhtar stressed upon the leadership to carry out cost-of-service study and set power and gas tariffs accordingly.

He pointed out that recovery from industrial consumers was 100% and distribution losses were zero.

Published in The Express Tribune, January 25^th, 2022.

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