LAHORE: Next few months could prove crucial for the survival of Punjab’s textile industry as it tries to cope with growing cost of production because of gas shortages, high electricity prices and stuck-up sales tax refunds.
“You’ll see a significant decline in textile exports (from Punjab) between May and September,” Sheikh Ilyas Mahmood, chairman of the Faisalabad-based Pakistan Textile Exporters Association (PTEA), said on Wednesday.
He said the government should raise gas supply to the factories to help exporters cut their energy costs, release billions of rupees stuck in sales tax refunds and give one-time compensatory rebate to make up for the losses suffered by the industry on account of exchange rate appreciation.
He said the increase in the electricity rates in September last year and 70 per cent gas cuts to the factories in Punjab meant increase of Rs10 per unit of electricity compared with the mills in Sindh and Khyber Pakhtunkhwa.
Similarly, the unpaid sales tax refund claims had wiped out 30-35pc liquidity of manufacturers and revaluation of the rupee had caused a loss of Rs7-10 a dollar to the exporters. “These factors have rendered us uncompetitive within the country,” he added.
All Pakistan Textile Mills Association (Aptma) claims that at least 25 spinning and weaving factories had already shut down in the province and another 70 curtailed production by 33pc. Half of Faisalabad-based processing industry is closed down because of gas shortages.
“There is a shortage of yarn and grey and processed cloth in the market,” said Ijaz Khokhar, a Sialkot-based garment exporter and chief patron of Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA).
He said the industry would find it difficult to make the most of the concessions given under the European Union’s GSP+ scheme, unless “yarn is available at right price and the processing industry provided gas”.
Aptma (Punjab) chairman S.M. Tanveer confirmed that many factories were piling up yarn and cloth inventories. He said the producers have a choice to wait for the right time. “If the government wants to help and save the industry, it will have to move fast and now.”