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Pak industry runs out of cotton, faces loses of orders

Pakistan’s textile industry is running out of cotton stocks. So says the All Pakistan Textile Mills Association (APTMA).

As a consequence, mills are in danger of shutting down. Exporters are turning away orders as they are not sure of the availability of raw materials to fulfill the orders. The damage to Pakistan would not only be lower exports this year but also the permanent shift of the orders to other countries which would be very difficult to reverse.

A dollar spent on the import of cotton yields $3 in exports. The estimated cost of ten million bales of cotton at today’s price is $4 billion, which would translate to minimum exports of $12 billion. The country’s textile sector consumed 15 million bales in the last year which indicates that approximately ten million bales would need to be imported in order to retain exports at the same level as last year.

Pakistan’s economy largely depends on textile exports for foreign currency and employment. A dicey international economic situation and catastrophic floods have pushed the country’s economy to the brink. Since banks are willing to entertain only small and limited letters of credit for companies that are direct exporters, says APTMA, this excludes 80 percent of the basic industry and ignores the fragmented structure of the industry. The raw material (cotton) is not available to the entire sector.

 
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