Pakistan's Textile Industry in Crisis: Urgent Measures Needed
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- Published: Sunday, 05 November 2023 00:43
Pakistan's textile industry, which has been a vital cornerstone of the national economy, is facing a severe crisis. According to the caretaker federal minister for commerce, more than 1,600 textile factories have shuttered in the country over the last 16 months. A combination of factors, including high energy costs, gas supply shortages, low gas pressure, and complications in the sales tax refund system, are driving this downturn.
One of the primary culprits behind the decline in Pakistan's textile industry is the prohibitive cost of energy. Many factories are operating far below their production capacity due to these high energy costs. Additionally, the two-day weekly closure of gas supply and low gas pressure during the limited hours it's available have further hampered production.
These are not just inconveniences but are, in fact, the lifeblood of textile manufacturing. These industries require a stable and affordable supply of energy, as they depend on it for every step of the production process.
The issues faced by the textile sector extend beyond production limitations. Textile exporters find themselves ensnared in a frustrating sales tax refund system that has caused a severe financial crunch. This, in turn, is making it increasingly difficult for them to meet their export orders in a timely manner. This setback not only affects the livelihood of countless workers but also hampers the country's export potential.
Considering the integral role that the textile sector plays in Pakistan's economy, immediate government intervention is imperative. A focused approach to boost textile exports and sustain the textile industry's growth is the need of the hour. The government must prioritize policies that support this critical sector, enabling it to regain its competitiveness in the global market.
The government should take the initiative to develop a comprehensive five-year plan for revitalizing the textile industry. Consultation with industry stakeholders is crucial to ensure the plan's success. Among the critical elements of this plan is the provision of utilities at competitive rates. This will help textile manufacturers reduce their production costs and achieve self-sustainability in energy.
Guaranteeing an uninterrupted gas supply to the textile sector is vital. These consistent supplies will substantially lower operational costs, helping the industry regain its footing. Moreover, it is essential that the government offers financial incentives or loans for the installation of solar power-generation systems, ensuring sustainable and cost-effective energy solutions.
Simplifying and speeding up the sales tax refund process is equally crucial. The government should work diligently to refund pending sales tax amounts as per the relevant rules. This move will alleviate financial pressure on textile exporters and enable them to meet their export commitments more efficiently.
To further support the textile sector, the government should consider restoring the zero-rated status for the designated five export-oriented sectors. This step will not only boost the textile industry but also provide the government with the opportunity to focus on expanding the tax net and increasing revenue collection for the national exchequer.
Pakistan's textile industry has long been a source of pride, driving economic growth and employment opportunities. The current crisis requires the government's immediate and comprehensive attention. By taking these steps, Pakistan can restore the health and vitality of its textile sector, ensuring that it remains a driving force in the nation's economy.