The All Pakistan Textile Mills Association (APTMA) has written a letter to Prime Minister Shehbaz Sharif urging him to announce measures for the industry as the economic foundation of the nation is the textile industry. It is Pakistan’s largest manufacturing sector, contributing 8% of the country’s GDP, about 60% of all exports, and employing more than 40% of the workforce. The sector is facing unprecedented problems this year after the flood. According to data from the Board of Investment, Pakistan had more than 400 factories operating in 2020, and cotton, the primary raw material for this industry, was easily accessible despite a steady decline in production to a level of 50%. After two years in 2022, all hopes for improvement were dashed in the light of the recent devastating floods. Currently, there is a crisis in the textile sector, which needs the government’s attention.
The liaison for the textile industry claimed that the liquidity crisis was significantly hurting exports and rising unemployment. The letter claimed that “the liquidity crisis has occurred due to demand destruction at the onset of a recession in export destinations, abandonment of the faster system commitment to pay refunds within 72 hours, and foreign buyers extending their payment period against shipments.” The letter emphasised that, as the FBR has already acknowledged, domestic sales of the sector do not account for more than 20% of industrial output. The letter concluded that “Back in 2019, the government promised industrialists that they would investigate the matter in 6 to 8 months, but no such review has been carried out even after three years.” Figures also support the APTMA case as textile exports fell by 16.3% in 2021-22 compared to the previous year, primarily because of a 100% increase in working capital, the inactivity of the new textile unit, a lack of cotton in the nation, and a depreciation of the rupee against the dollar in imports. The textile industry is experiencing a severe financial crisis as a result of the non-payment of Rs345 billion in refunds of various taxes to the exporters over the past six months and the sum has grown from Rs15 billion to Rs55 billion. Without the removal of the 17% general sales tax imposed on textile exports, the export industry cannot survive. The government should give the textile industry special attention to address its issues, or else future months will see a decline in textile exports.