APTMA chief urges PM Sharif to take steps to save textile industry

ISLAMABAD: Pakistan's textile industry has said that the country's economic revival is not possible without reviving exports, which have fallen significantly in recent months.

In a letter to Prime Minister Shehbaz Sharif, the patron-in-chief of the All Pakistan Textile Mills Association (APTMA), Dr. Gohar Ejaz, said that Pakistan's market share of the international trade in textiles has declined from 2.2 percent in FY22 to 1.76 percent.

He said that the withdrawal of the Regionally Competitive Energy Tariff (RECT) earlier this year has severely curtailed the competitiveness of Pakistan's exporters. Additionally, high interest rates of 22 percent, the withdrawal of zero-rating facility (SRO 1125), non-functioning of the FASTER system, and delays in sales tax refunds have caused a severe liquidity crunch in the textile sector.

“This sustained decline in year-on-year monthly exports throughout the fiscal year is alarming. More importantly, 50 percent of the existing production capacity is currently inactive or idle, and as a consequence of the non-continuation of RCET, another 25 percent is on the way to shutting down.”

Ejaz said that Pakistan's Textiles and Apparel Policy 2020-25, which emphasized market-driven exchange rates, tariff rationalization, and provision of stable energy supplies at regional competitive rates, has faced significant implementation challenges.

“The withdrawal of the Regionally Competitive Energy Tariff (RECT) earlier this year has severely curtailed the competitiveness of our exporters. Additionally, high interest rates of 22 percent, the withdrawal of zero-rating facility (SRO 1125), non-functioning of the FASTER system, and delays in sales tax refunds have caused a severe liquidity crunch in the textile sector.”

Ejaz urged the Prime Minister to ensure a cost-of-service-based tariff for the electricity export sector, as per actual NEPRA determination. This tariff should exclude cross-subsidy, stranded costs, and excess T&D losses, as these cannot be exported.

The industrial tariff B-3 is 37.50 per unit, and B-4 is 36.20. These tariffs are too high and make the products in the international market uncompetitive. However, if cross-subsidy, stranded costs, and excess T&D losses are excluded, the tariff for B-3 would be 24.15 and for B-4 would be 22.88.

The APTMA chief also asked for a comprehensive review of the Textiles and Apparel Policy 2020-25 to identify and address implementation challenges, ensuring policy continuity and fostering a favorable investment climate.

He argued that Pakistan's textile industry holds the potential to make a substantial contribution (60 percent of the total exports) to this revival, and that by implementing the above-mentioned policies, the country's textile industry can generate an additional $10 billion in exports within the next financial year.