Escalating production costs threaten sustainability of textile sector

Pakistan's textile industry, vital to the nation's economy, faces a daunting challenge of soaring production costs despite stable cotton prices, raising concerns about the sector's sustainability if corrective measures are not taken promptly.

Pakistan’s cotton production increased 75% to impressive 8.35 million bales. The remarkable growth can be attributed to the favourable weather conditions and the government's announcement of a higher support price of Rs8,500 per 40kg for the season.

“However, textile mills are facing escalating production costs due to various factors,” said an official of All Pakistan Textile Mills Association (APTMA).

Speaking to WealthPK on condition of anonymity, he said while stable cotton prices might provide a semblance of stability, the reality was that textile manufacturing involved a complex interplay of inputs, market dynamics and external factors that significantly impacted production costs.

He said that textile manufacturers faced significant challenges due to a surge in energy costs, including electricity and gas, energy shortages, and increased financing expenses, expensive raw materials and a domestic financial crisis.

“Moreover, the situation has been compounded by escalating transportation expenses resulting from higher fuel prices,” he added.

Ahsanul Haq, Chairman of Pakistan Cotton Ginners’ Forum, said the industry was grappling with the rising cost of production due to increased energy prices. He said structural reforms to address taxation issues, infrastructure deficiencies and regulatory bottlenecks were imperative to enhance the sector's resilience and competitiveness.

He said the major boost in commodity output was attributed to Sindh, where the harvest increased by 120% to 4.11 million bales. The rest of the production, totalling 4.24 million bales, came from Punjab, marking a 47% rise year-on-year. 

He estimated the full-season output to be in the range of 8-9 million bales this year.

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