ur economic distress has been compounded by the high global commodity rates. The textile sector, Pakistan’s major export sector, that had been growing at a promising pace, has also been impacted.

The sector had flourished on subsidised power and gas supplies to bring tariffs close to the regional competition. However, prices of fuels that generate electricity have suddenly become very high. The government has yet to notify new electricity and gas tariffs for the industry.

Meanwhile, the power supply has also become erratic due to low generation resulting from a shortage of fuel. Gas supplies to Asian economies have nearly dried up as the Europeans are bidding unimaginably high prices to lift the liquefied natural gas. They are curtailing gas purchases from Russia, which had been their major gas supplier for decades. Russia is under sanctions for waging a war in Ukraine. The gas supplies to even the exporting sectors have been suspended because of acute shortage.

Gas and power are the lifeline of the textile sector, says MI Khurram, a leading knitwear exporter who also runs two spinning mills. “The export sector expects an increase in tariffs of both power and gas because of the high global prices. The government has yet to announce the new rates at which power and gas would be supplied to the textile exporters. This has created an uncertainty.”

Khurram says the exporters realise that there will be some raise in the rates on account of depreciation of the rupee against the dollar and some because of the higher prices of these commodities in the global market. However, he adds, the new tariffs should be close to the rates prevailing in the regional competitor economies.

He says that the textile sector is facing a liquidity crunch as well. “The promise by the finance minister that the DLTL refunds amounting to Rs 40 billion would be released by June 2022 may have been for public consumption only.” He says automated refunds of sales tax after realisation of export receipts have “almost stopped. A trickle might have landed in some influential exporter’s account.”

He says that most of the refunds are on hold on the pretext of an audit despite complete documentation. “A few cases of audit might be justified but not all. This is going back to the tax collectors that were eliminated in the automated refund regime.” He said this will likely result in rent seeking for early release of refunds.

Pakistan Hosiery Manufacturers Association chairman Shahzad Azam Khan says global recession is on the horizon. “Many international buyers have asked the exporters to hold their orders. There are no new orders.” He agrees that it is not a Pakistan-specific phenomenon. The textile goods suppliers the world over are facing the same problem.

“The shipment costs have gone up. The containers are not readily available for exports. The arrival of ships has become uncertain. Dispatching shipments on time has become a nightmare for many exporters,” he says, adding the export momentum was somehow sustained till June but one should expect a decline in July.

Khan says for almost a week in July gas supplies to the exporting industries were curtailed. The power supplies were erratic. There were long hours of load shedding. Further, the government has announced five holidays from July 8-12 for Eid probably to save power.

He thinks many factory workers will take this opportunity to go home (most of them do not visit home for the usual three holidays on the occasion). He fears that many will stay back for a while and rejoin work by July 15. This will delay the resumption of normal production.

The textile sector has undergone a positive transformation over the last three years. Its exports have shifted from low value-added yarn and cotton to high valued products. In 2018-19 the textile exports had amounted to $13.329 billion. The major contributors were cotton yarn $1.12 billion, cotton cloth $2.20 billion, knitwear $2.99 billion, bed wear $2.26 billion, readymade garments $2.65 billion and towels $786 million.

In the year 2021-22 that ended on June 30, the textile exports are expected to cross $19 billion once the data for June 2022 is compiled. In the first 11 months (July-May), according to the Pakistan Bureau of Statistics, the textile exports clocked $17.62 billion. This is an increase of $4.29 billion in two years. The cotton yarn exports stood at $1.11 billion and that of cotton cloth $2.23 billion. These two sub sectors contributed almost nothing to the increase in textile exports.

The knitwear exports jumped by $1.76 billion to $4.64 billion, bed wear exports increased by $746 million to $3.00 billion. The readymade garments exports increased by $880 million to $3.53 billion, towel exports increased by $234 million to $1.02 billion. The value-added textiles now account for 69 percent of the total textile exports.

The All Pakistan Textile Mills Associations has a major share in guiding the state on textile policy. It may be because APTMA was the major force in textile trade till the start of this century. Now the combined share of yarn and cotton cloth in textile exports has declined to 15 percent.

The knitwear sector alone commands double the share of yarn and fabric. Each subsector of textile has its own association registered with the Trade Organisations director. Each association deals with issues of pending refunds of its members separately with the Federal Board of Revenue. Still, at the policy level, compared to the APTMA, the voice of other sub sectors remains muted.

The APTMA claims that many players in the other subsectors of textile are also their members. But the number is small. The APTMA membership is less than 375. Assuming that all their members are also present in any other textile subsectors, the total would come to another 375.

The membership of knitwear and readymade garments associations is over 20,000. They are relatively voiceless because they all started small and only a few have graduated into medium and large enterprises. The sponsors know their job. Most of them still work at the production floor. They know how to market their products, maintain quality, reduce waste and train new workers in garmenting skills. They employ the largest number of workers in the textile sector (about 80 percent). They have less wealth individually than any textile mill and little influence in the corridors of power. In many cases, their interests diverge with those of yarn and fabric exporters. They deserve more attention from the textile policy makers in line with their share in textile exports (that is constantly increasing).

The writer is a senior business reporter