Due to the economic and energy crisis, the risk of default in the textile industry increased

Karachi: The risk of default in the textile industry increased due to the power and gas crisis, import restrictions, high production costs and capital shortages.

In an emergency letter sent by the All Pakistan Textile Mills Association to Prime Minister Shahbaz Sharif, the representative association of the industry has informed the government that the disruption in the supply chain, shortage of capital and energy, raw materials, plant machinery, spare parts. Difficulties in imports have put the textile industry in crisis.

The letter states that the textile industry is working at 50% production capacity and monthly textile exports are expected to be less than one billion dollars from next month.

The association informed the Prime Minister that the cotton crop has been severely affected by the floods, the textile industry requires 1.4 million bales of cotton and only 50 lakh bales are available. In this uncertain situation, the exporters are hesitant to take new export orders, the textile industry is facing severe shortage of capital due to 60% fall in rupee value compared to last year, non-timely payment of refunds. Due to this, the industry is facing financial difficulties.

According to Aptma, due to these factors, the supply chain is adversely affected and the industry’s production, operations and cash flow have become more difficult to sustain. The export industry is under a lot of pressure and is facing difficulties in repayment of loans, which threatens to default export units. Is.

According to Aptma, Punjab industries are being given expensive RLNG as compared to Sindh industries due to which competition has become difficult for Punjab industries while new RLNG connections are also not being given. Similarly, the textile industry is also facing disruption in the supply of electricity. In the name of maintenance, electricity is not available for five to six days in a month, due to which the production capacity of electricity-operated industries has decreased by 25%, compared to Sindh. Textile mills of Punjab are getting expensive electricity. Aptma also termed the stalling of new units and expansion projects in the textile industry as a threat to the industry and Pakistan’s economy.

The letter said that the textile industry has invested $5 billion in the last two years to set up new factories, many of which are nearing completion and more are under construction. while letters of credit are not being opened for import of spare parts and electricity and gas are not being provided to the newly established units. Machinery for many factories has arrived at the port, which is not cleared, delaying and delaying the projects and increasing their cost.

APTMA has appealed to the federal government to suspend payments from banks of the textile industry from July 1, 2022 to June 30, 2023. The plant machinery that has arrived at the port should be cleared immediately RCET should be extended for new and expansion projects. Long-term credit facilities should be provided for projects for which LCs have been opened and approvals have been received from banks.

The letter also asked that a task force consisting of industry representatives should be constituted to resolve the energy issue by ensuring uninterrupted supply of electricity and gas at subsidized tariff to the export units on equal basis.

Leave a Comment

Your email address will not be published. Required fields are marked *