Textile Exporters Warn Removal Of Lower Tariff Could Harm Industry

Textile Exporters Warn Removal Of Lower Tariff Could Harm Industry
Textile exporters have expressed concern that the removal of the current power tariff of nine cents per kilowatt-hour (kWh) could significantly harm the textile industry, and reduce national exports.

In a letter written by Pakistan Hosiery Manufacturers and Exporters Association (PHMA) Chairman Abdul Rehman, exporters have appealed to Prime Minister Shahbaz Sharif to continue with the regionally competitive power tariff, as it is beneficial for the stability of the textile industry, as per a report by The Express Tribune.

The letter said that exporters were shocked to discover that the Cabinet Division of the federal government has issued a correction reneging on its decision about the power tariffs taken on July 27, according to which the rate of nine cents per kilowatt-hour (kWh) would remain in place for the export-oriented textile industry till FY22-23.

“This is a very alarming and unfortunate news which brings forth disastrous impact on the cost of manufacturing goods meant for exports as even the existing cost is already higher as compared to regional countries, whereby Pakistan exporters do business on a very narrow margin of 2% to 3%,” the letter read.

Topline Securities textile sector analyst Saad Ziker said that these rates should continue till at least FY23, as that would help bring about stability to the textile industry during an already shaky economic environment, mentioning that the textile sector significantly contributes to the national exports.

“Regionally competitive power tariff is necessary for an export-oriented sector such as textile so that it can be competitive in the international market. The results are also justified as textile exports touched the government target of $20 billion,” said Aba Ali Habib Securities textile sector analyst Ali Asif.