Uncertainty squeezes embroidery sector hard

Updated 28 Jul 2020


FAISALABAD: An embroidery unit lying closed. — Dawn
FAISALABAD: An embroidery unit lying closed. — Dawn

FAISALABAD: The increasing prices of yarn and electricity and non-payment by buyers have landed embriodery factory owners in a difficult situation as almost 50 per cent of units in Faisalabad have been closed.

These units are providing embroidered fabrics for men, women and children across the country and abroad as well.

All Pakistan Embroidery Machine Association President Abdul Ghafoor said: “We have been rying to convince the government to focus on this segment having the potential to create thousands of jobs, however, the people at the helm seem unwilling to pay heed to our suggestions.”

As many as 3,500 to 4,000 units exist in Faisalabad and more than 500,000 people are directly and indirectly attached with this business and feeding their families. However, he said uncertainty due to the lockdown hit the financial position of all these people.

50pc of units closed due to hike in yarn and power rates

He said a majority of the factories’ production had decreased by 50pc which meant that the units were facing financial losses. “We are trying to keep our workers engaged with us so that they can avoid financial hardships.”

“A few people are involved in importing the thread being used for the embroidery and they are deducting sales tax from the factory owners. It’s ironical that these importers are not registered with the FBR which means that they are involved in tax evasion,” he said.

Mian Abdul Khalid, secretary information of the association, said the prices of yarn surged almost by 50pc during one year and similarly electricity unit rate increased from Rs16 to Rs28. He said the factory owners were finding it hard to run their units as no relief package has been announced for the sector.

“We are suffering a lot as we have no lobby in the power corridors like some other influential associations,” he said adding closure of the sector would lead to unemployment.

The government had promised that sales tax imposed on our raw material would be reduced to a single digit, “although we had been demanding zero-rated facility like it was a couple of years ago. However, he said the government did not fulfil its promise,” he said.

Like Faisalabad, he said, the embroidery factory owners of Lahore, Gujranwala, Multan, Peshawar, Sheikhupura, Hafizabad and other areas were also in trouble and thinking to close their units to avoid further financial losses.

“We are the biggest SME sector and nobody at the government level could realise potential of this segment for jobs creation,” he added.

Mr Ghafoor said: “The government considers this sector as unorganised although we had off and on requested them [government] to register us. We have been paying sales tax and entitled to refunds whereas we are not getting any benefit even after paying the sales tax.”

“We are asking the government to register our units, however, it is of the view that our tax chain is not complete. Who will complete the tax chain as we have no authority or mechanism to complete it,” the association president said.

Owing to uncertainty, [information secretary] Mr Khalid said a number of customers had stopped placing consignments and not releasing the payment of [completed] orders which squeezed the cash flow.

Published in Dawn, July 28th, 2020