Textile industry raises SOS flag
In an SOS to the prime minister, All Pakistan Textile Mills Association (APTMA)’s Patron-in-Chief Gohar Ejaz on Saturday said, the risk of default in the textile industry has increased due to the power and gas crisis, import restrictions, high production costs and capital shortages. If the problems are not resolved immediately, banks may also be affected.
Seeking help from Prime Minister Shehbaz Sharif, Ejaz said, “Disruptions in the supply chain, shortage of capital and energy, difficulties in importing raw material, plant machinery, parts have all put the textile industry in crisis.”
“The textile industry is running at 50% production capacity and there is a fear that exports will be less than $1billion from next month onwards,” warned the patron-in-chief.
In its emergency letter, the association informed the prime minister that, “The cotton crop was severely affected by the floods. The textile industry requires 14 million bales of cottons but only 5 million bales are available.”
As a foreign exchange crisis grips the country’s markets, imports are a difficult endeavour. In this uncertain situation, exporters are reluctant to take new export orders.
“The textile industry is facing a severe shortage of capital due to a 60% fall in the value of the rupee compared to last year. It is also struggling to make timely payments for refunds,” says Ejaz.
“Due to these reasons, supply chain has been adversely affected and the industry’s production, operations and cash flow have become more difficult to sustain. The export industry is under a lot of pressure and is facing mounting difficulties in repaying loans with a risk of export units defaulting. This situation may lead to a crisis for banks as well as reducing the export capacity of the entire textile industry,” warned the letter.
According to APTMA, the industries in Punjab are being given expensive RLNG as compared to the industries in Sindh. Even electric supply is not consistent, leaving the industry without electricity for five to six days in a month due to which the production capacity has decreased up to 25%.
“The textile industry has invested $5 billion in the last two years to set up new factories The imported machinery for these factories is still stuck at the port and letters of credit (LCs) are not being opened. These issues are adding to the burden of the industry,” said the letter.
The association appealed to the federal government to suspend the repayment of the textile industry’s loans for a period of one year from July 1, 2022 to June 30, 2023. It also demanded the clearance of the machinery stuck at the ports.