Textile industry urges swift policy measures to avert crisis

• PTC says structural reforms under IMF led to trouble for textile sector. 
• Anwar highlights industrial electricity tariffs surged to 16-18 cents/kWh.
• PTC chair points out that working capital rates jumped from 2% to 14%.
  

KARACHI: The Pakistan Textile Council (PTC) has urged Minister for Finance and Revenue Muhammad Aurangzeb for a swift policy intervention to avert a looming crisis in the textile industry, The News reported. 

In a letter to the finance minister, Chairperson of the PTC Fawad Anwar mentioned the severe financial strain faced by the textile sector, which contributes nearly 60% of Pakistan’s export earnings and provides employment to over 15 million people. 

Despite the positive impacts of structural reforms under the International Monetary Programme, their implementation has led to unsustainable financial challenges for the textile industry, necessitating immediate policy adjustments.

Anwar highlighted that industrial electricity tariffs had surged to 16-18 cents/kWh, nearly double the rates in Vietnam, Bangladesh, India and China. 

Meanwhile, gas prices for captive power had skyrocketed to over $13-14/MMBtu, compared to $5-8/MMBtu in regional economies, with additional capacity charges and surcharges further inflating costs, he added. 

The PTC chairperson also pointed out that working capital rates had jumped from 2% to approximately 14%, and recent IMF-driven tax policies, including minimum turnover taxes and super taxes, had raised effective tax rates to over 50%. 

This had significantly impacted profitability in this low-margin, high-volume industry, he said.

Anwar noted that crucial industrial reinvestments had become nearly impossible due to soaring short-term interest rates. 

The PTC warned that the stringent financial conditions could lead to deep recessions, social unrest and the permanent loss of industrial capacity. 

Rising costs had already prompted some Pakistani textile manufacturers to relocate operations abroad, threatening the country’s competitive edge in textile manufacturing, he added. 

The council further warned that continued financial strain could result in the closure of textile mills, triggering mass unemployment, civil unrest and long-term economic instability. 

The PTC urged the government to adopt a balanced and calibrated approach that ensured economic stability without compromising the long-term viability of the country’s key foreign exchange-generating industries.