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Egypt textile sector needs subsides to face competition
31
Dec '11
Egyptian textile industry continues to suffer as domestic products fail to compete with low-priced imports of textile and readymade garments from other countries, according to a report.

In recent times, some large textile units have shut down as production costs and salaries of workers continue to mount, according to the report presented by Mohsen el-Gilani, Head of the Holding Company for Spinning.

In his report to Prime Minister Kamal el-Ganzouri, Mr. Mohsen said the textile sector employs over 30 percent of the Egyptian workforce and hence closure of textile industries in the country would lead to social disaster.

He has recommended the Government to act swiftly to protect the country's domestic textile industry, which is suffering from unfair competition.

The report says in countries like India, Pakistan and Uzbekistan, the Government subsidizes cotton and yarn and also provides support for their exports. The Egyptian Government needs to give a similar subsidy to textile manufacturers in the country to enable them to withstand the fierce competition from imported goods.

At present, import of yarn into Egypt attracts a custom duty of only 5 percent and a 10 percent duty is levied on imports of fabrics.

The report states that part of the problem can be addressed by halting or rationalizing the export of cotton to meet the needs of domestic textile producers.

Last year, an agreement was reached between the Federation of Cotton Exporters (FCE) and Egypt's spinning and weaving mills to halt signing export contracts until early June. The deal permitted domestic companies to procure cotton at the export price.

However, the report said such measures are not enough to revive Egypt's giant textile industry that once accounted for nearly 25 percent of the country's exports.

Fibre2fashion News Desk - India

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