Textile industry on verge of default
22 March, 2023
The unavailability of cotton and curbs on opening Letters of Credit (LCs) for imports have badly impacted exports of the textile industry, causing large-scale unemployment across the sector.
The issue was raised by the All Pakistan Textile Mills Association (Aptma) recently in a letter sent to State Bank of Pakistan (SBP) Governor Jameel Ahmad. The association warned that the textile industry was on the brink of default as its production and earnings were way below the potential.
In the letter, the textile lobby outlined the major problems besetting the industry. Textile mills are running at less than 50% of their production capacity and so far around seven
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million people associated with the sector have been rendered jobless. “The textile sector is closed in the current unfavorable conditions. Consequently, there will be massive unemployment in the country,” said the Aptma letter.It voiced fear that the industry’s closure would leave more than 10 million people jobless and the country would lose annual export revenue of more than $10 billion.
Aptma pointed out that the local cotton production had remained at less than 5 million bales in the current season because of last year’s floods and heavy rains.
Therefore, “the textile industry will have to import at least one million bales of cotton to meet its requirement. However, banks were not opening LCs for import of the required quantity of cotton.”
It cautioned that textile mills were running out of cotton stocks and that the industry would shut down completely owing to the unavailability of raw material.
The association urged the SBP governor to allow the opening of LCs for cotton import, citing that import consignments were stuck at ports, which needed to be released on a priority basis.
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Source: tribune.com.pk