INP-WealthPk

Shortage of raw material dents textile production

March 31, 2023

Mansoor Sadiq

The textile industry, the leading export-oriented sector of Pakistan, has witnessed considerable decline in production owing to import curbs and resultant shortage of raw material. Reduced production meant loss of job for thousands of workers and the number is feared to increase further as no improvement is visible in the situation.

The cotton crops in Pakistan were damaged severely in the flash floods last year which resulted into low production of five million bales. In this scenario, Pakistan had to import at least one million bales of to fulfil the export orders. However, non-issuance of letters of credit (LCs) for cotton imports due to shortage of dollars meant that the textile sector had to operate with insufficient raw material. The old stock of raw material is dwindling fast and there is no option but to stop production when necessary material is not available. It has been learnt that the textile sector is currently operating with less than 50% of its actual production capacity.

Zahid Ahmed, Executive Member of All Pakistan Textile Mills Association (APTMA), told WealthPK that challenges facing the textile sector are increasing with each passing day as banks are still reluctant to issue LCs for import of raw material. He said the local textile industry is facing the prospect of a complete shutdown if imported cotton shipments stuck at the port are not cleared on a priority basis.

The APTMA in a letter to the governor of the State Bank of Pakistan (SBP) has stated that the textile industry has reached to the brink of default. The letter mentioned that a lot of workers in the textile sector have already lost their jobs, and many more are in the line if the situation doesn’t improve.

Credit: Independent News Pakistan-WealthPk