Pakistan’s textiles industry that has 55 per cent share in the total exports of the country and 8 per cent share in its Gross Domestic Product (GDP) seems to be in deep waters nowadays. Over the last few months, it has talked a lot about the challenges it is facing and demanded the government announce remedial measures.

In a series of events, the industry has also intensified its lobbying and raised its issues at different forums. For example, a couple of days ago, a team of the All Pakistan Textile Mills Association (APTMA) appeared before the Senate Standing Committee on Textile Industry and presented its case. The association also announced a nationwide strike but deferred it after getting certain assurances from the government.

The APTMA team visiting the Senate raised special concerns about the expected government decision to purchase one million bales of seed cotton (phutti) from the market at a rate of Rs3000 per 40 kg through the Trading Corporation of Pakistan (TCP). It expressed fears that the intervention of TCP would disturb the demand-supply mechanism in the open market and lead to speculation and artificial increase in domestic cotton prices.

It suspected the TCP would pick these bales from around 14 million bales available in the market, most probably without ensuring its quality and to oblige selected farmers. The chances of other irregularities by the TCP officials during this procurement exercise are also high, it fears.

The farmers’ community on the other hand is celebrating this expected announcement with a hope that the number of bales to be purchased by the TCP will be increased later on. Their point is that farmers shall be compensated this year as they have suffered huge losses. They attributed these losses mainly to the increasing input costs, fall in cotton prices in the global market and damage to the local cotton crop due to inclement weather this year.

The other issues of the textile industry include the pending release of outstanding refunds to the tune of Rs100 billion to textile exporters by the Federal Board of Revenue (FBR), the ever-rising input costs, unfavourable utility tariffs structure, high cost of doing business in Pakistan and its exports being uncompetitive in the international market.

Anis-ul-Haq, Secretary APTMA, tells TNS that the association strongly believes the farmers shall get due price for their produce but not at the cost of the industry and the national exchequer. He says if the TCP buys one million bales, the market sentiment will change and prices will soar. The textile industry which is already 15 per cent ineffective will come under further pressure, he adds. Besides, he says, the textile industry is selling cotton yarn in the market just to show its presence in the global market.

Haq adds they have suggested to the government to give direct subsidy to farmers and relief in taxes on agricultural inputs. This way, he says, farmers will get a good return on their investment without distorting the cotton prices in the local market. It is quite likely the government will go for direct subsidies and scrap the idea of purchase through the TCP.

Haq says the TCP bought 100,000 cotton bales in the past which are still lying in go-downs and nobody is ready to buy them due to the poor quality of this cotton. "I fear it would be a repeat of this if the TCP enters the arena." Besides, he says, the industry is cash-strapped due to the non-release of export refunds by the FBR. The board has been asked to release a part of this amount without delay. If this happens the textile industry will get a new lease of life, he adds.

Khalid Mahmood Khokhar, President Pakistan Kissan Ittehad (PKI), who represents farmers, says he has also been called by the same Senate Committee. Furthermore, he says, the prime minister has invited them to a Kissan Convention in Islamabad this month where they hope some farmer-friendly announcements will be made. He tells TNS that there is nothing wrong in demanding support price for cotton. "If the Indian government can set support price for 26 crops, why can’t our government offer support for three to four crops only."

On APTMA’s resistance, Khokhar says the millers want to buy cotton for free and exploit farmers. He suggests the association shall sit with the farmers, calculate the production cost of cotton and pay a profit of Rs200 per 40 kg only to them. "Farmers will not demand anything else." He also suggests 25 per cent regulatory duty on import of cotton and yarn to ensure that the textile mills do not resort to buying raw material, leaving the local cotton unconsumed.

On the other hand, Haq reiterates the farmers shall get relief through subsidies and not through artificially inflated prices. He says the lack of check on imports/smuggling, dumping by India, China etc and the extremely high cost of doing business as compared to others in the region have already harmed the industry. "It shall not be burdened further."

SM Tanveer, APTMA chairman, states that during the period between 2006 and 2013, the textile exports have increased by 230 per cent in Vietnam, 160 per cent in Bangladesh, 97 per cent in China and 94 per cent in India. On the other hand, he says, Pakistan’s textile exports have grown by merely 22 per cent during the same period. One reason for this, he says, is that Pakistani textile industry is at a disadvantageous position when compared to its competitors in terms of the cost of doing business.

This disparity shall be removed to enable the APTMA achieve its short-term target of doubling its exports from $13 billion to $26 billion, creating 15 million direct and indirect jobs and attracting new investment of $ 1 billion per annum, Tanveer demands. He says unfortunately even the opportunity offered by the GSP Plus status could not be availed by the industry due to these very reasons.