A prominent economist of Pakistan Dr Mehmood Ul Hassan Khan has said that at least 187 textile units, mainly in Punjab, have closed during the past few months. Faisalabad, the much-vaunted textile town, has been hit hard by the rapid closure of the mills, rendering hundreds jobless. Incidentally, the textile sector contributes over 60 per cent to the country’s exports and 8.5 per cent to Pakistan’s GDP, he added.
The textile industry in Faisalabad desperately needs a meaningful policy response, financial package and incentives from the federal and Punjab governments. “Both the governments should take all possible holistic and comprehensive structural reforms and measures replacing outdated machinery, reducing high energy costs, promoting cotton into man-made fibres and effective financial assistance,” Dr Khan said.
“Unaffordable energy costs of factories are making every work uncompetitive,’’ All Pakistan Textile Mills Association (APTMA) Southern Zone Chairman Naveed Ahmed said. Quoting figures regarding prohibitive energy costs, he said that while Pakistan’s consumption revolves around 14,000 megawatts, but plants having a capacity of 45,000 megawatts have been set up. These plants are paid by the government even when they remain idle and the consumers have to bear the back-breaking burden, Ahmed said.
India was once a big market for Pakistani textiles, particularly suits, which were a huge hit in northern Indian states like Jammu & Kashmir, Himachal Pradesh and Delhi. Due to strained relations between the two nations, bilateral trade has almost come to a halt, and this has hit Pakistan economy hard. Pakistani suits, in much smaller numbers, still reach India via Dubai and such other cities, but that adds to the costs making their unattractive for ordinary Indians now.
APTMA chairman Ahmed pointed out that industries are being supplied electricity at rates between Rs38 to Rs40 per kilowatt-hour (kWh) or per unit. “The industries can be run profitably only if they are provided power at Rs 26 per unit. Why the industrial units have to foot the bill for line losses and capacity charges while there is no power theft in industrial zones,’’ he asked.
Commercial establishments, including shops, supermarkets and emporiums are being charged at an exorbitant rate of around Rs 60 per unit, he added. He blamed capacity payments to idle power plants as the main reason for the high energy costs, according to a report of The Express Tribune.
It bears mention here that in May 2024, there were massive public protests in Pakistan Occupied Jammu Kashmir (POJK) over unfair taxes on electricity. These protests were led by a rights body named Joint Awami Action Committee (JAAC) against government crackdowns. The committee had organised protest marches in Muzaffarabad, Rawalakote and many other cities. Bowing to these protests, the Federal government headed by Prime Minister Shehbaz Sharif had granted many concessions on electricity supplies in POJK.
It is likely that the protests can break out in Punjab and neighbouring Sindh due to high energy costs in the coming months.
Praising India’s policies in the textile sector, the two experts have suggested that the Pakistani policymakers must study the textile policies of India. The other countries they mentioned included Vietnam and China. “At the regional level, mutual investment ventures with regional countries like Uzbekistan, Kazakhstan, Azerbaijan and Bangladesh in the country should also be explored through rigorous economic policy, protecting the best interests of the Faisalabad textile industry,” Dr Khan said.
To address the issues being faced by the textile sector, he said that there must be a host of quick initiatives such as establishing textile development banks, textile tax courts, and model textile centres for research and development (R&D) while ensuring a sustainable supply chain. It bears mention here that after massive floods in Pakistan during 2022, the cotton crop was badly hit. Before 2019, supply of Indian cotton to Pakistan used to ensure uninterrupted supply chain. This has, however, been snapped and hit the Pakistani textile sector hard.
