Textile Crisis and its impact on Economy

Pakistani textile industry is now in worst condition since its existence. Although numerous economic problems are being faced by the government due to lack of management skills and planning however the textile industry of Pakistan has also been hit by toughest recession in the decades. No doubt there has been a global textile recession but we cannot take it as the major cause for the downfall of textile industry in Pakistan. As a matter of fact, Pakistan’s textile exports contributes about 60 percent to the country’s entire exports and no one is unaware of the impact of a country’s exports on the overall economy of a country. 

Now proceeding to some statistical estimates, well, Pakistan is ranked 8^th largest textile exporter in Asia and it contributes about 8.5 percent of the total GDP. In addition, it provides employment to 38 percent of the work force of the country. 400 textile industries were shutdown and many more were threatened in 2009. Did the government is well aware of the results of closing down the textile sector of Pakistan? If it does, then why they neglected the economic afterward facts that it may would result in decrease of millions employments, a loss of more than billion foreign exchange, deficiency in tax revenue and closure of banks because of credit default. What do we have to call it? Negligence or failure?

Being specific to the problems that we have shaped ourselves, first of all, the energy crisis which is the main reason of the downfall. The existing energy needs are not sufficient as a result of which some textile industries have totally shutdown, some textile units have built their own energy generating plants and others being smart using the energy privately, being expensive, increasing its per unit cost of our product in the global market which is lessening the interest of buyers in the international market subject to our commodities and also forecasting the threat of our survival in the international market. Now switching other problems that are being faced are the lack of Research and Development (R&D) in cotton sector and short of modernized equipment as compared to the international. The use of obsolete technology is increasing the cost of production among other competitors in the market like china, India and Bangladesh. The ongoing depreciation of the Rupees in the global market had also a great impact on the price of our product in the market. The tax on textile resources is also in rising trend which makes it difficult for the exporters to continue production and discourages the new entrants in the market. Instead of imposing tax on the textile industry, they must give subsidies to encourage textile sector to give support to this sector. 

The current situation of Pakistan and security threats portrays a depressing image of the country in the world hence lack of new investment is also taking place. The textile sector is the backbone of Pakistan economy and Government should pay a serious attention in this regards. 

Ali Owais

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