KARACHI, July 17: The apparel industry has rejected the textile package approved by the Economic Coordination Committee (ECC) of the cabinet. It feels that incentives announced in the form of research and development (R&D) are not supportive to the level and magnitude of the crisis being faced by the sector.

Talking to Dawn on Monday, textile industry leaders expressed their disappointment over the package and felt that it was too little to have any worth mentioning effect on the crisis-ridden industry where cost has gone as high as 28 to 30 per cent.

The textile industry after the quota-free era was inflicted on two accounts. It has lost per unit price up to 15-16 per cent and due to higher input cost its prices in the world market have gone up by 14-15 per cent, taking net impact to around 30 per cent.

Pakistan Readymade Garments Manufacturers and Exporters Association (Prgmea) Chairman Bilal Mulla said the package carried nothing for the value-added garment industry, adding that the three per cent subsidy on fabric exports would result in an increase in prices in the domestic market.

“This will also be tantamount to give subsidy to our competitors in the world market and make Pakistan a raw material source for apparel industries of other countries, as they would get fabrics from Pakistan on three per cent reduced price,” Mr Mulla observed.

As a result, apparel industries of India and Bangladesh will have a further edge of three per cent in the world market over Pakistani textile goods. The Prgmea chief pointed out that the domestic price level was determined on the basis of international supply factors, as exporters of fabrics would charge an additional amount equivalent to the subsidy which would increase fabric prices in the domestic market.

Mr Mulla said due to negative travel advisory by the western world, exporters of garments and other made-ups had to travel abroad more frequently which further increased the cost of production by around six per cent. “Therefore, the garment exporters have been requesting the government to give a five per cent travel support fund to pull them out of the current crisis.” This suggestion, which was a part of the recommendations made by the Zubair Motiwala committee to the Federal Textile Board, was totally ignored by policymakers.

The Prgmea chief demanded of the government to provide the travel support fund to the garment exporters and put restriction on three per cent subsidy or R&D on export of fabrics to Saarc and those countries that had advantage of greater market access to the EU, US and Canadian markets over Pakistan.

Mr Mulla regretted that the most-affected readymade sector was totally ignored and the textile package in its present form would further bring the apparel industry under pressure and accelerate the process of closure of units. “It would make Pakistan a raw material supplying nation and discourage value-addition, as the sectors producing finished products have been totally rendered unviable and uncompetitive in the world market.”

Pakistan Hosiery Manufacturers’ Association (PHMA) Chairman Javed Bilwani has also rejected the textile package and said there was no new incentive for the apparel industry which was fast sinking and already a large number of units had been closed down.

He said had the six per cent R&D been sufficient, there would have been no large scale closures of knitwear units in the country. “The package has totally disappointed the industry.”

Mr Bilwani said many business houses involved in the knitwear industry were looking for other opportunities and soon there would be more closures. He added that the hosiery industry was recognised for its quality products but presently it had become unviable only because of high cost of inputs.

Iqbal Magarani, former chairman of the Pakistan Cloth Merchants’ Association (PCMA), said instead of giving three per cent R&D to the fabric exports, the government should provide more incentives to those sectors which were producing high quality goods.

He said there was a major flaw in the textile package that ensured a five per cent R&D on bedlinen exports but this could only be availed by those units which had their own dying, processing and printing facilities. “This means that 80 to 90 per cent exporters, particularly commercial, will be left out of this benefit.”

Shabir Ahmed, Chairman of the Pakistan Bedwear Exporters Association (PBEA), said had there been a proper representation at the policymaking level, such flaws would have never occurred. He said only big representative bodies were given representation whereas small and medium exporters were left out and added that the interest of SMEs was not protected.

Mr Shabir said the textile package would give little help in boosting exports and the textile industry might further lose ground. He said under such change joblessness would go up.