Knitwear industry faces daunting challenges: experts

LAHORE: Pakistan’s knitwear industry faces daunting challenges, as the Indian government has announced 13 percent rebate on knitwear exports, experts said on Wednesday.
Pakistan’s knitwear industry is surviving without getting any benefit of the GSP Plus status because India has effectively neutralised this advantage.
“We envy Indian knitwear exports for such prompt response of their government to the GSP Plus threat they faced from Pakistan,” said Shahzad Azam Khan, former chairman of the Pakistan Hosiery Manufacturers Association (PHMA).
He said the planners in Pakistan had always been lethargic when the industry needs facilitation from the government.
The Indian knitwear exporters would get rebate to compete with Pakistan, while the knitwear exporters are running from pillar to post for the billions of genuine sales tax refunds lying with the state for more than two years, he said.
“Can we compete globally when the approach towards the exporters is exactly opposite to the facilitating approach of the Indian government? He asked.
Khan said the planners are delaying crucial decisions that could benefit the textile sector. The textile policy, for instance, was due in July 2014, but it was announced recently, he said, adding, instead of announcing general rebate to nullify the impact of rebates announced by the Indian government, some rebate has been promised only on exports that exceed 10 percent from the previous year.
Khan said there is no dearth of orders from foreign buyers. “We accept only those orders that could be executed in time taking into account the acute power shortage,” he said.
The buyers impose heavy penalties on late shipments that are unbearable for the exporters. “Some government actions show that it is bent upon increasing the cost of doing business.” Now that the global furnace oil prices are at their lowest, the Pakistan government has slapped additional duty on it denying the private sector the advantage of low prices, he said.
He said the exporters are living on edge and cannot go for alternative power production because of the mistrust created by the government policies.
Adil Butt, a knitwear exporter, said Rs60 billion Export Development Fund contributed by the exporters from their own resources is lying with the government.
“It is not being used for promotion of exports,” he said, adding, the Ministry of Finance is sitting on these funds, which belong to the exporters.
There is a tussle between the Ministry of Finance and the Ministry of Textiles, he said, adding, this leads to non-utilisation of the Export Development Fund.
To boost exports, the ministries of commerce, textiles, finance, water and power and petroleum would have to be on one page, he said, adding, through coordination and prudent management 24 hours power and gas supplies to the exporting sector could be managed.
Butt said many leading knitwear units have closed down due to financial crunch caused by stuck up refunds or unavailability of gas and power.
He said some units closed down due to heavy penalties they faced for delay in shipments. Some of the state-of-the-art units closed down in the last few years included Highnoon Textiles, Irfan Textiles, Zeinal Textiles, Needle Point and Azam Knit and Yarn Dying, he said, adding, most of these units employed a workforce of over 4,000 each.
M I Khurram, another knitwear player, said it is tragic that the knitwear industry is in turmoil not because of its incompetence or compatibility, but due to the failure of the state to fulfill its obligation of providing basic infrastructure to the industry.
“It is extremely painful to refuse an export order because of power shortages deny it the ability to operate at full capacity,” he added.
He said dismayed by the non-friendly business policies of the government several exporters have established their units in Bangladesh and Sri Lanka.
However, he said, they had to pack up, as the Indian lobbies in both these countries make it very difficult for Pakistanis to operate. “We as investors do not get the government support that is provided to their investors in foreign soils by the Indian government,” he added.