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The fresh crisis leading to higher cost of production in Pakistan textile industry will open up new export opportunity for Indian companies on the back of performance linked incentives announced by the government to boost exports.
Unlike India, Pakistan has a preferential treatment and their textile industry taps the developed markets duty-free. One of the largest cotton producer, India competes directly with Pakistan, Bangladesh and Vietnam.
The Pakistan textile industry has plunged into new crisis with electricity board of the country refusing to honour the subsidy offered by the government.
In a letter written to Prime Minister Mian Muhammad Shahbaz Shariff, the All Pakistan Textile Mills Association said the government had committed a Regionally Competitive Energy Tariff of 9 cents for FY22-23, but the power division has notified that the subsidised tariff will be discontinued from October 1.
This will push the power tariff to 20 cents/kwh and many factories have started closing down , it said.
While the textile industry in Punjab is being supplied 50 per cent of its gas and RLNG at $9 per mmBtu, the gas supply to export units in Sindh is at $3.75 and at a quantity meeting 80 per cent of their requirement, said the association.
This huge difference means that units in Punjab are paying $9 for gas and 20 cents/kwh of electricity, while bulk of Sindh industry is generating own electricity at 4 cents.
International demand has weakened at the onset of world recession and without price competitiveness it is not possible for Pakistan textile industry to retain its market share, it said.
India’s textile sector
Last September, the BJP government approved the PLI scheme for textile products with an aim to promote MMF (man made fibre) apparel, MMF fabrics, products of technical textiles and to enhance manufacturing capabilities and exports from the country of select MMF products with an approved outlay of ₹10,683 crore.
The government has already approved projects worth ₹3,513 crore in Madhya Pradesh under the PLI scheme for the textile sector.
The Textile Ministry, earlier this year, had approved 64 projects with a proposed investment of ₹19,798 crore under the PLI scheme.
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