LAHORE, May 24: At least 116 textile mills have closed down with 700,000 spindles going out of operation, the All Pakistan Textile Mills Association (Aptma) said.

“Another 20 mills are on the verge of closure before the end of this month,” Aptma spokesman Tanvir Sheikh said on Thursday.

He said the mills that had already shut down their operations included 24 members of Aptma. He claimed that some 200,000 spindles in the country had gone out of operation during this month alone. But he did not give the names of the mills, which have stopped operations. Nor did he offer any other evidence to substantiate his contention.

He said the banking sector has an exposure of Rs120 billion to the textile industry, warning that a large portion of this credit will turn into bad loan if proper measures are not taken to resolve the problems facing the textile sector.

The magnitude of the crisis can be judged by the fact that thousands of workers have become unemployed and more jobs are at risk if immediate policy changes are not made,” Mr Sheikh warned.

He said the industry was faced with numerous problems like power outages, increase in interest rates by three times in two years, rise in labour costs by over 33 per cent in the last budget, increase in polyester prices by Rs4 in the past two months alone.

Gas prices for captive power generation increased by 36 per cent in the last one year, huge rise in transport costs of raw material as well as its finished products while huge amounts continue to remain stuck up in sales tax despite zero rating of this sector.

“To make matters worse the consumption of local yarn has decreased due primarily to its reduced usage in the weaving sector owing to load-shedding.

“In sharp contrast Bangladesh gas prices for captive power generation are one third of ours, fuel prices are nearly half thus reduced transport costs, labour cost is one third of ours, besides cash rebates paid on purchase of local yarn and fabrics. Preferential duty rates are charged on Bangladesh products in Europe and USA,” he said.

India is giving direct subsidies on interest rates to the entire textile chain, including spinning. The biggest threat to the Pakistani textiles is that no buyer wishes to visit Pakistan due to local problems.

“All these factors cause a death blow to the industry,” the Aptma spokesman said.

He pointed out that the Gherzi report commissioned by the government clearly elaborates on three points – high mark-up rates, high trash content in cotton and low productivity of workers - while it appreciated the state of the textile machinery, particularly in the spinning sector making it clear that there is no quality or BMR issue as is being made out by certain vested interest groups.

Even those points, which have been highlighted by the government’s own consultant, have not resulted in any positive action, he said.

“The government has got one report after another but nothing has come out of these reports. The desperation and despondency of the textile industry can now be gauged from the fact that it is now asking the government to give the millers an exit strategy on the pattern of Chapter 11 (of the United States) so that they can close down their factories,” he said.