Daily Times

Addressing a National Assembly committee on Thursday, the All Pakistan Textile Mills Association (APTMA) chairman S M Tanveer lamented the decline of the textile industry, saying, “This industry is on the brink of total closure due to an unviable investment environment, amid high costs of doing business.” He pointed out that the textile industry cannot withstand the burden of Rs 170 billion in taxes and argued that the high costs of doing business had led to the closing of 40 mills in the past year. APTMA’s bid for relief from these taxes does not seem unjustified. The share of Pakistani textiles in the global market has dropped by 0.4 percent in the past five years and the general trends of the textile industry show that it is steadily declining. Although, according to APTMA, textile exports have been dropping by 2.65 percent per month, textiles still comprise over 60 percent of Pakistan’s total exports. The collapse of this vital industry will have serious implications for our economy. Despite having been granted GSP Plus status and better trade opportunities in the European Union and other parts of the world, Pakistan’s textile exports declined by 2.85 percent from May 2014 to May 2015.

APTMA blames this decrease in productivity on the taxes and tariffs imposed on textile producers and the high costs (and lack of steady supply) of gas and electricity. The controversial Gas Infrastructure Development Cess, in particular, is seen by textile manufacturers as an unfair burden on their industry. The power shortages and inconsistent supply of power and gas means that the textile mills cannot function at full capacity, which drives up production costs, decreases productivity and makes them even less competitive. China is capitalising on mass production to become one of the largest textile exporters in the world, having increased its share in the global market from 27 percent in 2006 to 37 percent in 2013. Bangladesh and India are also becoming increasing competitive textile manufacturers and exporters in the region. To keep up with the modern world of the textile trade, Pakistan’s textile mills will have to be updated to more efficient modes of production, with newer machinery and an emphasis on producing finished products, rather than yarn and other rudimentary textiles. Modernising an outdated industry in these trying economic times will certainly be risky, but that is what textile industrialists need to do in order to establish their place in the global market. While APTMA’s grievances about the crushing energy tariffs and taxes imposed upon them are valid and the government must provide the industry some relief, encourage investments in the sector and lift the ban on new electricity and gas connections, as the NA committee has suggested, the body will have to encourage its members to modernise the production process and increase the proportion of value added goods produced. *