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Pakistan needs capacity expansion to boost textiles industry

Pakistan’s textile industry has witnessed dwindling investments over the last decade. Currently around 35 per cent of the textile industry’s production capacity is impaired. Prospective investors are reluctant to make new investment decisions due to high cost of doing business. As a result, the industry lost technological advantage over its competitors.

The sector will need an additional 10.3 million bales of raw cotton, 345 million kg of manmade fiber, 1.983 billion kg of additional yarn and an additional 7.928 billion square meters of processed fiber. Cotton-producing area and cotton production, however, have declined 30 per cent and 38 per cent respectively in Punjab since 2011.

Readymade garments have shown an impressive growth over the years despite the overall poor performance of the textile sector. Exports of readymade garments registered 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.