PTC seeks Aurangzeb’s help to save sinking textile industry

ISLAMABAD: The Pakistan Textile Council (PTC) has called for immediate policy intervention from Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb to avert the collapse of Pakistan’s textile industry.

In a letter addressed to the minister, PTC Chairman Fawad Anwar outlined the severe financial strain on the textile sector, which contributes nearly 60% of Pakistan’s export earnings and employs over 15 million people. While structural reforms under the IMF program have had some positive effects, their implementation has led to unsustainable financial challenges for the industry, necessitating urgent policy recalibration.

PTC highlighted that industrial electricity tariffs have reached 16-18 cents per kWh— almost double the rates in Vietnam, Bangladesh, India, and China. Additionally, gas prices for captive power have risen to over $13-14 per MMBtu, compared to $5-8 per MMBtu in regional economies. Furthermore, additional capacity charges and surcharges have further inflated costs.

The Council also pointed out that working capital rates have surged from 2% to approximately 14%. Recent IMF-driven tax policies, including minimum turnover taxes and super taxes, have raised effective tax rates to over 50%, severely affecting profitability in this low-margin, high-volume industry. Investment in critical industrial reinvestments sector has become nearly impossible due to soaring short-term interest rates.

Citing global examples such as Argentina (2001) and Greece (2010), PTC warned that stringent financial conditions can lead to deep recessions, social unrest, and the permanent loss of industrial capacity. Rising costs have already prompted some textile manufacturers in Pakistan to shift operations abroad, undermining the country’s competitive edge in textile manufacturing.

PTC cautioned that if current financial pressures persist, it could lead to the closure of textile mills, resulting in mass unemployment, civil unrest, and long-term economic instability.

The Council urged the government to adopt a balanced and calibrated approach that ensures economic stability without compromising the long-term viability of Pakistan’s key foreign exchange-generating industries. Key recommendations include: (i) balancing proposed reforms with global competitiveness considerations for export sectors; (ii) gradually phasing out subsidies while enhancing public infrastructure for sustainable energy pricing; (iii) reducing capacity charges by negotiating lower tariffs with power producers, especially for imported fuel-based plants; (iv) revisiting levies on captive power and ensuring regionally competitive gas rates for industrial use; and (iii) implementing a more balanced taxation framework that ensures industry viability and retains critical foreign exchange inflows.

“We believe a calibrated policy approach can safeguard Pakistan’s textile sector from irreversible damage while still aligning with the country’s macroeconomic goals,” stated Fawad Anwar.

Copyright Business Recorder, 2025