LAHORE, Jan 6: Textile industry, which earns around 60 per cent of the country’s export revenue and employs 45 per cent of non-farm labour, has so far lost more than two months’ of production due to non-availability of gas and power, spinners claim.

They have also called for restructuring of loans, reduction of interest rates and provision of uninterrupted supply of power and gas to export-oriented units for optimal capacity utilisation.

“Some 90 per cent operating textile industry is incurring losses and facing closures,” said a spokesman for the All-Pakistan Textile Mills Association (Aptma) on Tuesday.

“We are considering applying closures at the association level and have convened an extraordinary general meeting of the member mills on Friday to formalise a strategy.”

Apart from power shortages, the spinners and the rest of the textile industry argues that high cost of finance has adversely impacted the competitiveness of the industry in the world markets.

The State Bank of Pakistan has jacked up its policy rate by 5.5 per cent to 15 per cent in 18 months since July 2007 in its battle against rising headline inflation that has averaged above 24 per cent in recent months.

The last time the bank raised its policy rate by two per cent only days before Pakistan successfully negotiated IMF loan.

Manufacturers claim that banks were supplying credit to the private sector at more than 20 per cent as the banking spread (the difference between lending and deposit rates) grows to a record high of 7.75 per cent from two per cent in 2004.

“Since 2004 interest rates have shot up dramatically. KIBOR has surged 261 per cent.

The banking spread is among the highest in the world and it is evident that such a high spread could be realised only with skewed effect to other sectors,” the Aptma said.

“The high interest rates were afforded to the banking sector to the detriment of the manufacturing sector.”

The industry says the repercussions of a downturn in the manufacturing sector, particularly the textile industry, would be varied and diverse.

“At stake are more than three million direct jobs and export revenues badly needed to cover the rising current account deficit,” the spokesman said.

The quantity of textile exports has already dropped by up to 20 per cent in quantitative terms due to unavailability of electricity and gas, impediment to market access, unfavourable financial and economic environment and poor law and order and terrorism within the country.

“The industry has been striving hard to maintain the viability of operations, but the recent poor financial results are proving very unsettling for it,” the Aptma said.