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Thursday March 28, 2024

Wide technology divide stands in the way of textile revival

By Mansoor Ahmad
August 09, 2017

LAHORE: Muhammad Pervaiz Malik, Minister for Commerce and Textile, who himself is a veteran industrialist from the crisis-hit basic textile sector, is very well alive to the fact that it will be a daunting task for his ministry to manage massive subsidies needed to narrow the yawning technological divide that continues to widen further, owing to a total absence of upgrade.

Ali Pervaiz, the son of the commerce minister, is central vice chairman of All Pakistan Textile Mills Association (APTMA). The APTMA claims that 40 percent of its capacities are closed due to high cost of doing business. There was 30 percent cut in power rates, 40 percent reduction in energy rates plus export rebates to recapture the basic textile market they lost in past four years. Pakistan’s textile exports have declined from $13.50 billion in 2013 to $12.1 billion in the last fiscal. The overall decline in the last four years is only $1.4 billion, whereas the fall in non textile stood at $3.5 billion. On average, textiles account for 55 percent of Pakistan’s total exports; however, its share rose to 60 percent last fiscal.  

The lower decline in textile exports and higher in non textiles shows that there is definitely something wrong with the government policies. The non textile exporters claim that the smaller decline in textile exports was more due to facilitations, the government provides to textile sector over other sectors. They added that for instance textile mills are given priority in the supply of power and gas. They are also preferred by the financial sector. An interesting point in this regard is that the exports of value-added apparel textiles have not been affected by export decline. This sub sector was probably boosted after Pakistan was awarded GSP Plus status four years back.

The point to ponder is that what type of support each sub sector of textiles requires. Ten years back Pakistani basic textiles were the most efficient amongst its competitors. Today they are not efficient as most of the sector is operating on 10-year old technology. The government support is provided if any sector comes under stress from external pressures. However it is not prudent to subsidise sectors that are inefficient. Subsidies to inefficient sectors go down the drain. Basic textiles need a new beginning and government support to upgrade the technology. Many big textile houses have had the opportunity and resources to go for new technology but they waited for the government to provide some support. During this wait and see policy Bangladesh, Vietnam, India and China imported huge quantity of basic textile machinery. These four countries in fact were the main importers of yarn and fabric from Pakistan. Now these countries, particularly India and Vietnam are exporting yarn. The yarn imports from India to Pakistan have increased tenfold in last four years and yarn exports from Pakistan to India have declined to zero.