Textile sector threatens for indefinite shutdown

KARACHI/LAHORE: At least 400 textile mills across the country will shut their production on October 14 to protest against the escalating cost of doing business in Pakistan, trade leaders said on Monday.“High power tariff and gas infrastructure development cess (GIDC) add around Rs170 billion to the cost of doing business every year,” said Tariq Saud, chairman of All Pakistan Textile Mills Association (Aptma) addressing a press conference.Industry leaders said the protest is also against the delayed announcement of the textile relief package by the government.

“All the member textile mills will stay closed on Wednesday to observe a black day against the delaying tactics of the government on the textile relief package,” said Amir Fayyaz, Aptma Punjab chairman at a separate press conference. Fayyaz said a majority of members desire not to run their factories until the government announces the package.The finance minister promised a relief package for the sagging industry in the first week of September.

Textile exports fell to $1.83 billion in August as against $1.9 billion in the same month a year ago and “industries in Punjab were already told that there would be no gas supplies for three months November onwards,” Fayyaz said. Aptma leaders said the government raised GIDC for captive power plants to Rs200/unit, which jacked up gas tariff by 23 percent.

They said cost of gas for industry rose to $6.7/million metric British thermal unit (mmBtu) and $7.7/mmBtu for captive power plants as compared to $4.2 (India), $3.1 (Bangladesh) and $4.2 (Vietnam). Electricity tariff for the industry is 15 cents/unit as compared to 8 to 9 cents/unit in the neighbouring and competing countries. Ex-chairman Yasin Siddik of Aptma said 30 percent of spinning mills, having 0.2 million to 0.25 million spindles worth Rs3.467 billion, have been closed due to increase in cost of doing business.

Fayyaz said operating industries at the current high power rates is not viable, “the losses will be halved if the industries are closed.” “Indefinite closure of basic textile industry will render 1.5 million workers jobless,” he warned. Fayyaz said the government is taking steps to further increase the cost of doing business. “Under-invoiced Indian yarn is imported at nominal duty of five percent, while Pakistani yarn is subject to 28 percent duty in India,” he added. Saud said Pakistan imported 16,000 tonnes of yarn from India last year at five percent duty.

He said the industry is not demanding currency devaluation, “but a level-playing field, which is not provided to them.”

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