Textile Bailout-2019


The PTI Govt. is trying its best to take steps for industrial revival. The Textile sector being the largest contributor in export earnings of the country is on top of the list.

A package was announced earlier to address grievances of the textile industry, facilitating it to gain it lost footing. Now the Govt. has again came up with another bailout package worth Rs.29 billions by waiving taxes and duties on cotton, the single important input in textile production.

But the downside is that this package primarily will hep only the tycoons of the industry. The small & medium industry will have to do nothing with it. In a way such packages are remained in practice of each and every Govt. in power to keep happy the industrial big guns to gain their support. Such packages ever failed to stir revival of industry and production but filled the pockets of cash hungry barons.

As projected by the officials the Govt. will loose Rs.14.6 billions in custom duty, Rs.6.9 billions in additional custom duty and Rs7.7billions in sales tax. Recently the Govt. approved Gas subsidy for 5 zero-rated export industries that amounts to Rs.25 billions. Again the textile giants are the major gainers of the incentive package.

Another official news reveals the waiver of 50% of the outstanding gas infrastructure cess (GIDC) amounting Rs.40 billions out of Rs. 80 billion payable in arrears by the Textile Industry. The textile exports from Pakistan are not gaining momentum despite all these incentives as our prices still remain a bit higher as compare to Bangladesh & China. Bangladesh being the close competitor taking up our share.

The estimated consumption of cotton by the industry is around 12 to 15 million bales of cotton per year. Textile industry in Pakistan need to import cotton as the local production remain under the level of required consumption.

The expected local cotton produce is around 10 to 11 million bales of cotton in the ongoing financial year, a decrease of 9.7% compared to the previous year and down 24% from the initial target of 14.37 million bales.

The textile ministry claims that 10.78 million bales have already reached cotton ginning factories from farms by the beginning of January 2019.

The local produce is decreasing as farmers complain that pro industry policies of the successive Governments have left less for them to grow cotton. They feel deprived of the competitive price and compelled to opt for other crops paying better price incentive.

During the period of last Govt. the focus remained to keep happy the textile tycoons at the cost of poor unorganized farmers, the story being re-told by the present Govt. as the sentiment of farmers goes around.

The revival of textile industry is only possible by creating the harmony among all production sectors from farmers to factories shifting focus on value addition rather than exporting cotton first and than importing and than exporting the yarn to deprive local weaving and value additions segments of the industry.

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