Two major Chinese organizations have declared plans to found plants in Pakistan to produce raw materials for the textile industry, facilitated by the Special Investment Facilitation Council, SIFC. Rainbow Industries Ltd. from China is prepared to cooperate with Shaoxing Chemical Industries, a joint venture focused on revitalizing Pakistan’s textile sector.
The project is anticipated to bring in millions of dollars in investment, targeting the production of affordable raw materials for local textile manufacturers. Energy tariffs and external investment challenges remain hurdles for the textile industry.
However, the Pakistani government is trying hard on working measures to resolve these issues. The revival of the textile industry was highlighted during a two-day expo organized by the Rainbow Group and the Punjab Giant Chemical Merchants Association. A nine-color end-camp expo attracted over 300 exhibitors from countries like Malaysia, Turkey, Iran, and China, bringing together key industry stakeholders and business leaders to discuss improvements in the sector.
Furthermore, the federal government has already launched a 10-year duty-free machine import scheme and establishment of units in special economic zones for foreign investors. With support from SIFC, Chinese investment is anticipated to bring advanced technology and enhance the growth of Pakistan’s textile industry.
In the last month, leaders of all of Pakistan’s textile mill associations, Aptma Central, and Southern Zones, have highlighted a charter of demands to run the industry seamlessly and effortlessly. Talking to media persons at the press conference, they focused on the vitality of the textile sector, claiming it was the foundation of the country’s economy and contributing 44% to the all-inclusive export earnings.
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Aptma Central Vice-Chairman Naveed Ahmed emphasized the government to minimize interest rates to 6-7% from 19.5% supply electricity at 8-9 cents per kilowatt hour, KWH instead of 14 cents, and remove all unreasonable taxes on imports, exports, and earnings to allow the industry to run its own business.
Aptma Central Vice-Chairman Naveed Ahmed pointed out that the export-oriented textile industries of Sindh and Balochistan were facing severe issues in the wake of the inconsistent supply of both gas and electricity. The economy of Pakistan pivots around two essentials, that is energy and textiles, because 60% of our exports constitute textiles, however, 30% of our imports are comprised of energy.
This becomes more critical when various studies project the export potential at $50 billion per year by 2030. For 2016, $4.5 billion in fiscal year 2022-2023, with the historical maximum reaching $220.1 billion in FY2022. Some sources highlight this potential even at $100 billion. If realized, it can easily pull us out of the perennial malaise of a deficit in the balance of payments.
The textile sector employs about 45% of the total labor force, linked with the manufacturing sector. Additionally, the industry is much more heavily dependent, relying on cotton. Therefore, any disturbance in the cotton crop highly affects the performance of the economy and the sector.
The challenges of cotton have only grown with time. Its production was 615 kg per hectare in 1990 and 617 kg in 2020, which is considered to be a clear indication of the failure of poor performance in this segment, particularly when China’s yield now touching 2,027 kg per hectare grew by more than 150% during the same 30 years.