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Costs deter investors in Pakistan’s textile industry

Pakistan’s textile industry has experienced decreasing investments over the last decade. Potential investors have been hesitant to make new investments due to high business costs. This has caused the sector to miss out on technological advantages to its competitors.

Currently around 35 per cent of the textile industry’s production capacity is impaired. The industry will need an additional 10.3 million bales of raw cotton, 345 million kilograms of manmade fiber, 1.98 billion kilograms of additional yarn and an additional 7.93 billion square meters of processed fiber.

Although the textile sector has performed poorly overall, readymade garments have shown reasonable growth. Exports of readymade garments registered a 5.55 per cent year-on-year growth against the overall flat growth of the textile sector. The industry wants long-term financing facility for indirect exports, Islamic financing and building of infrastructure for garment plants. It has also sought a long-term policy which includes consistent energy prices across the country, removal of the surcharge on the electricity tariff along with extending the duty drawback scheme for five years with drawbacks to be increased every year by one per cent for garments (up to 12 per cent) and made-ups (up to ten per cent) against realisation of export proceeds.