All Pakistan Textile Mills Association proposes to increase supportive policies for the textile industry

In a letter written on April 20, 2022 to the new chief executive of the country, APTMA urged him to ensure the continuation of Regionally Competitive Energy Tariff (RCET) to the textile industry with RLNG price at $6.5/MMBTU and electricity at 7.5 cents/ unit, immediate provision of gas connections to the new units coupled with extension of load for enhanced capacity and revival of sick units, and reaffirmation for export sector priority in gas allocation.

APTMA also called on the Prime Minister to ensure the cotton support price for this season was fixed at Rs8,000/ maund to encourage farmers to grow more cotton, making a point that the country every year loses at least $ 3 billion/ annum on account of low production of cotton.

The textile sector demanded a review of duty on Polyester Staple Fibre and removal of anti-dumping duties to enable Pakistani export products to compete internationally. It also asked the government to implement a weighted average cost of gas in letter & spirit, enabling uniform and rational gas or RLNG prices across the country.

In the letter, APTMA drew the PM’s attention towards the success story of exports showing the increase by 26 percent over the previous year to a record of $ 23.3 billion, the majority of which were textiles (61 percent).

It pleaded that the growth was enabled by implementation of Regionally Competitive Energy Tariff (RCET), investment of over $5 billion in expansion and establishment of 100 new textile units, resulting in enhanced export capacity of $ 500 million per month.

“The reduction in area and lower productivity has reduced the cotton production from a high of 14.81 million bales to 7.44 million bales last year. Cotton has lost 1 million hectares during the last decade and if this area reverted to cotton than the country will produce an extra 5 million bales of cotton which will add 1.523 percent to GDP and will save the country’s $ 5 billion directly while generating incomes in the rural economy of Pakistan and playing a vital role in poverty alleviation,” the APTMA said.

Coming to the energy issues, APTMA said that the cost to the exchequer of Regionally Competitive Energy Tariffs has been 2.44 percent of textile exports which was a tiny fraction of the cost of potential foreign currency borrowing that the forex earnings were replacing.

Meanwhile, President of the Federation of FPCCI Irfan Iqbal Sheikh has termed the ever-decreasing cotton production as a direct threat to the economic security of the country, as cotton is one of the most significant cash crops and above all it provides indigenous raw material for the country’s largest exportable product category, textiles.

Additionally, textiles exports are all set to cross the $20 billion mark in the outgoing fiscal year. However, cotton production has been reduced to 6-7 million bales per year, he added.

Sheikh said that Pakistan’s textiles products could become much more competitive, provided the entire amount of the raw material required is produced domestically or at least resumption of production of the previous levels of 10-12 million bales per year is ensured.

He added that importing 1 million bales results in the outflow of $1 billion of precious foreign exchange.

The FPCCI chief explained that 60% cost of producing the textile products lay with the raw material of cotton.

“Therefore, cotton is our lifeline as far as the lion’s share of our exports is concerned. “Producing more cotton will also strengthen our foreign exchange reserves, improve abysmal trade balance, and put a stop to the incessant rupee depreciation,” he said.

Sheikh noted with deep concern that the total area under cotton cultivation has declined by 1 million hectares and, if the government and agriculturalists can collectively reclaim that area from other crops like sugarcane, Pakistan could produce an additional 5 million bales per year and save $5 billion.