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Seven million textile people lost their jobs in Pakistan

All-Pakistan Textile Mills Association (APTMA) has pointed out to the Pakistan government that the country’s textile exports may fall below USD 1 billion per month from 2023 onwards. APTMA has sought the government’s help to save the textile sector. In addition, nearly 7 million people in Pakistan’s textile and garment-related industries have been laid off due to declining exports and the government’s failure to end the economic crisis, associations now claim.

Seven-million-textile-people lost their jobs-Pakistan
Figure 1: Pakistan’s textile and apparel industry is on the verge of closure as many units have already shut down.

APTMA said in a letter to Pakistan Prime Minister Shehbaz Sharif that the textile industry is utilizing less than 50 percent of its capacity. Many have already lost their jobs and a lack of corrective action could lead to more job losses. About 7 million people in Pakistan’s textile and garment-related industries have lost jobs due to dwindling exports and the government’s defeat to end the economic crisis, associations now claim.

In the press conference, the representatives of the Value Added Textile Association said that the present government has no policy to resolve the various crises of textile producers and exporters. Pakistan’s textile and apparel industry is on the verge of closure as many units have already shut down. Several others are planning to stop production or move overseas. However, APTMA rejected reports of the closure of textile mills across Pakistan.

Textile factories are deprived of essential raw materials and accessories. Letters of credit worth less than $5,000 are being rejected, which has hit export orders in the progress of $500,000 per shipment. This is causing severe disruptions and production delays and has led to the cancellation of export orders. The demurrage of various consignments has increased the cost a lot.

The association said the problem could be attributed to floods that destroyed the cotton crop and disrupted the supply chain. With only 5 million bales produced this year, while the industry needs 14 million bales, foreign exchange woes have squeezed cotton imports and other essentials for export. APTMA has requested the Government of Pakistan to restore zero-rating for the textile value chain and collect sales tax on domestic sales at the point of sale. It demanded an immediate refund of all deferred sales tax, tuff, and other dues and extended the date for submission of duty drawback claims for previous financial years.

According to APTMA, export-oriented units that needed to raise funds to service loans were under a lot of pressure. The crisis will lead to massive defaults, further reductions in capacity and a possible banking crisis, the association said.

Recently, Pakistani media reported that due to the unfavorable condition of Pakistan’s textile industry after the devastating floods, a trade body in Pakistan approached the Shehbaz Sharif government to allow the import of cotton from India. In view of the loss of cotton producers in Sindh and Punjab, the Pakistan Textile Exporters Association is proposing trade with India through Wagah to meet growing export orders. A total of 25 percent of the standing cotton crop has been damaged and Pakistan is likely to face a shortage of the raw material, the Pakistani newspaper said, citing preliminary estimates from exporters. The Government of Pakistan has recently formed a committee to discuss with seed companies and help them introduce advanced cotton seeds in the local market. According to the report, the decision to form a committee was reached at an important meeting to consult with stakeholders and review proposals for increasing the yield and area of the cotton crop.

Pakistan-textile-apparel industry-scenario-2023
Figure 2: Current scenario of textile and apparel industry of Pakistan.

The value of textile and apparel exports from Pakistan decreased by 5.10 percent in the first five months of the fiscal year 2022-23. During the period, Pakistan earned $7.361 billion from textile and apparel exports, compared to $7.757 billion in July-November 2021, according to data released by the country’s commerce ministry.

Textile cotton yarn exports fell 34.87 percent to $328.20 million, while cotton fabric exports fell 4.43 percent to $903.69 million, bedwear exports fell 13.29 percent to $1,219.31 million in July-November 2022.

However, knitwear exports increased by 2.53 percent year-on-year to $2,112.83 million during the period under review. Meanwhile, exports of non-knitted garments increased by 1.92 percent to $1,513.72 million.

On the import front, Pakistan’s synthetic fiber imports fell by 37.87 percent to $224.34 million, while synthetic and artificial silk yarn imports fell by 23.27 percent to $264.04 million during the same period. Meanwhile, the value of Pakistan’s textile machinery imports fell significantly by 41.16 percent to $212.76 million in the current fiscal year, reflecting a decline in new investment.

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