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Textile industry in throes of pessimism
Jul '08
Woes of the textile industry of Pakistan seems to be perpetuating forever and in the back drop of declining cotton production and soaring domestic demand, the situation seems to be turning for the worse.

Shortage of cotton production for the past three years has nearly crippled the textile industry impacting the economy in uncountable ways. While local consumption increased from 16 to 17 million bales, annual production was still hovering around 13 million bales in June 2008.

This apart, the industry which forms the backbone of the country's economy has been plagued by a series of other adversities which has relentlessly ensured to keep the output of the textile sector way below its proven potential.

Qualitatively incompetent products, power intensive & less productive machinery, lack of skilled labors, improper research & development, inability to fulfill big export orders, failure to make timely deliveries and an array of other problems have perturbed the textile industry for a long time.

Statistical reports have unveiled that in the period between July 2007 and April 2008 of this fiscal, textile products which accounts for nearly 65 percent of the total exports, gave a poor performance registering a decline of 2.5 percent.

Exports from the textile sector dropped by 9 percent to touch 56 percent of all shipments from the country, due to high cost of sustaining business and colossal competition posed by countries like India, China and Bangladesh. Astoundingly, the results turned out to be this atrocious, despite financial support bestowed on the industry by the Government.

The State Bank of Pakistan and other commercial banks had made available a total of Rs273 billion under the Export Refinance Scheme (EFS) to all eligible export-oriented sectors during the first three quarters of fiscal 2007-08. Of this, the textile sector alone availed Rs176 billion or 65 percent of the total loan at an interest rate of 7.5 percent.

This only goes to show that lack of proper finance may not be the only reason, behind poor performance and the actual problem may really be more structural in nature. So in spite of a magnanimous monetary support offered by the Government, the problem may still persist unless constructive changes are brought about by means of adequate supply of electricity, gas, provision for advanced technology and other infrastructural inputs.

To add to the existing adversities, the recent hike in prices of gas and power has virtually led the textile industry to the brink of collapse. Already cost of doing business is making exporters fear new ventures and to make matters worse, a considerable drop in foreign orders has also become a cause of worry.

Besides, import bill of the country is surging ceaselessly and this is amply evident from the fact that until May of this current fiscal year, import of oil alone had touched US $8.67 billion, reflecting a 47.04 percent year on year growth.

In the period between July and January of 2007-08, overall exports reported an increase of 5.95 percent despite a drop of 3.44 percent in textile shipments. Nearly all the categories of yarn and fabrics showed a negative growth with value-added sectors like knitwear, towel and bed-wear registering a decline of 11.21, 6.72 and 6.21 percent respectively.

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