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COVID-19 hits demanding Indian the high yarn

Textiles Industry

The textile industry of India, especially Gujrat, is suffering badly from the current spike of COVID-19 cases in prices in Pakistan
the country. The Federation of Gujarat Weavers Association (FOGWA) told the media that fabric production
has declined by around 22 percent compared to March 2021.

The Gujarat Chamber of Commerce and Industry (GCCI) and the Federation of Surat Textile Traders Associa-
tion (FOSTTA) have requested the state chief minister Vijay Rupani to impose a complete lockdown for one
week. According to these trade bodies, the voluntary 2-day lockdown on weekends is not enough to break
the chain of the coronavirus.

Restriction of working hours, migration of workers, and textile traders testing positive factors adversely affect
textile production and trade in the manmade textile hub. Though the government is yet to announce a
full-fledged lockdown, several workers migrate from Surat due to the fear that it might be imposed. As a
result, workers' strength in factories has gone down by 25-30 percent.

All Pakistan Textile Mills Association (APTMA) the value chain, but the so-called value-added
defended the high yarn prices across the country. sector of knitwear and woven garments is crying as
APTMA said that failure to hedge against exchange they do not want to pay global yarn prices fabric.
rate fluctuation is a business decision, and neither Import of yarn without duty and taxes from anywhere
the Government nor anyone else can be held is free for export purposes of the final product.
responsible. It is deplorable that some of the more
minor trade associations have politicized a purely Sources point out that cotton and yarn prices from
economic issue. The actual financial problem that
India are temporarily lower as Indian producers
PTEA to get a new head office has caused such an uncalled outburst is the fluctu- currently do not have access to the Pakistani
market, which does not require shipment by sea.
ating dollar price.
the pandemic, they have a temporary stockpile.
Spinners imported cotton when cotton prices were Also, as Indian exports were not as vibrant during
The Pakistan Textile Exporters Association (PTEA) will set up its new head office in M3 Industrial City of high (90 cents/lb), and the exchange rate was 165. Commerce and ECC of the cabinet had almost
Faisalabad Industrial Estate Development and Management Company (FIEDMC). Spread across an area of Currently, cotton is at 80 cents, and the exchange submitted to the demands of garment manufactur-
150 acres, the new office will help promote the country’s textile industry in the economic zones of FIEDMC. rate is 153. The combined effect is that raw material ers for the import of cotton from India. However, this
The land will be provided at a subsidized rate. (cotton) that has been imported is 22% more would have compromised Pakistan's principled
expensive. Still, the yarn manufacturers had to stance on Kashmir PM in full cabinet meeting
According to Pakistani media reports, a virtual meeting was recently held between Mian Kashif Ashfaq, adjust pricing in line with the lower cotton price and ruled it out.
chairman of FIEDMC, and PTEA chairman Muhammad Ahmed to make this decision. The FIEDMC chairman exchange rate, taking a hit of approximately 10% on
said that assistance would be provided to the association for the revival and development yarn's realized value. In a business that is But there is no stock of yarn or fabric currently
of the textile industry. volume-based with small margins, large-scale available, with the companies suggesting that the
unforeseen appreciation has wiped out profitability. funds were utilized elsewhere. Export Refinance
In an address to the representatives from Denmark, Norway, and Finland in a virtual roadshow organized by Failure to hedge against exchange rate fluctuation is availed by the value-added sector must be audited
Pakistan’s ministry of commerce, Ashfaq said that there are many opportunities in the FIEDMC economic a business decision, and neither the Government to see whether the credit is being used for the
zones for investors. He also noted that companies investing in the FIEDMC economic zones would be given nor anyone else can be held responsible. purpose it was meant to be. Cheaper yarn, as is
special incentives such as exemptions in income tax for 10 years and importing duty-free machines. claimed, could have been imported but was not
There is no question of shortage of yarn or fabric as done so. It would be interesting to find out what
it is in surplus. As per the free market mechanism, items this concessional finance has spent – there
the buyers only need to pay international prices to will be nasty surprises, APTMA argues.

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