To boost the textile industry's contribution to the national economy through exports, investment, and employment, Asif Inam, Central Chairman, All Pakistan Textile Mills Association (APTMA), called for a reduction in the power tariff to 9 cents/kWh, a decrease in the interest rate to 12 per cent, and the restoration of zero-rating for the textile industry.
Addressing these demands during a press conference at the APTMA office in Lahore, Inam highlighted, the industry is currently burdened with Rs 240 billion in cross subsidies and over Rs 150 billion in stranded costs. Providing electricity at 9 cents/kWh would generate over 300 MW of additional grid demand and Rs 500 billion in revenue, he argued.
The press conference was also attended by Kamran Arshad, Chairman-North APTMA; Asad Safi, Senior Vice Chairman; and Mohammad Raza Baqir, Secretary General North. Inam also questioned the government over maintaining of the current interest rate at 22 per cent despite a decline in the country’s inflation rate to 11.8 per cent. Lowering the interest rate could save the government Rs 3 trillion in interest payments, he opined. Regarding the demand for zero-rating, Inam criticised the government for holding onto a Rs 300 billion float of industrial sales tax refunds and proposed that sales tax be collected at the retail stage, which could potentially yield over Rs 250 billion.
Kamran Arshad, Chairman, APTMA-North emphasised on the need to restore the zero-rating regime across all manufacturing stages of the value-added textile chain and levying of sales tax only on end products fit for consumer consumption. This would help arrest the decline in textile production and exports and improve the current bleak situation, he argued. Arshad advocated for levying sales tax on local consumption of textile products without disrupting exports, suggesting this would revive the economy, increase tax collection from the textile sector, and alleviate the liquidity crunch faced by exporters. He also highlighted that this change would curb malpractices such as fake invoices and tax frauds.
Regarding the reduction in markup, Arshad noted that overall inflation is projected to remain between 13-15 per cent in the next year due to falling global commodity prices, sustained domestic demand destruction, and modest currency depreciation. He urged the State Bank of Pakistan (SBP) to maintain positive real interest rates to ensure the continuation of declining inflation and to help achieve the SBP’s medium-term target of 5-7 per cent inflation by September 2025, making single-digit inflation a tangible possibility.
Asad Shafi, Senior Vice Chairman pointed out, the export sector had previously benefited from Regionally Competitive Energy Tariffs (RCET) of 9 cents/kWh in 2021-22, which led to a 54 per cent growth in textiles and apparel exports, from $12.5 billion in FY20 to $19.3 billion in FY22. However, he noted that power tariffs for export-oriented firms have since risen to approximately 17.5 cents/kWh (Rs 46/kWh), making production financially unfeasible. These tariffs are more than double those faced by competing firms in regional economies such as Bangladesh (8.6 cents/kWh), India (average of 10.3 cents/kWh; 6 cents/kWh for textile and apparel firms in Maharashtra), and Vietnam (7.2 cents/kWh).
