Textile exporters have voiced concern that they continue to face difficulties in production due to cotton and yarn shortage coupled with a spike in their prices.

They urged the government to allow duty-free import of the two commodities from Turkey, India and Uzbekistan through the land route.

In a statement on Tuesday, Pakistan Yarn Merchants Association (PYMA) Senior Vice Chairman Hanif Lakhany requested Prime Minister Imran Khan to take steps for reducing the cost of production for the value-added textile industry.

“If duty-free import of cotton and yarn from Turkey, India and Uzbekistan is approved, the exporters will be able to compete in the ongoing price race in the international market,” he said.

“If the present crisis continues, not only will it become difficult for the traders to fulfill export orders but they will also be unable to compete in global markets, which could have a grave impact on the country’s exports.”

In the statement, PYMA office-bearers added that exporters in the value-added sector were reluctant to accept new orders due to difficulties in procuring the basic raw material.

They lamented that export orders were being diverted to other countries due to the problem.

Topline Securities analyst Saad Ziker said that yarn merchants wanted the government to take bold steps to end the shortage of raw material and arrest the hike in prices of cotton yarn.

“The two-faceted problem has led to inefficiency in the value-added production process and has resulted in a loss of potential orders from foreign players, which will dent exports from the country,” he told The Express Tribune.

“These types of loopholes in the value-added system can damage the overall economy because textile contributes 60-65% to the overall exports.”

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He, however, said that approval of the import of raw material from India was highly unlikely until the unilateral decision taken by India on August 5, 2019 was reconsidered.

In an appeal to the prime minister, Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Committee on Yarn Convener Farhan Ashrafi said that the value-added sector of Pakistan was facing immense difficulties due to shortage and hike in prices of cotton and yarn.

He added that the price of cotton yarn had hit record levels due to its unavailability.

Ashrafi appealed to Prime Minister Imran Khan to help exporters in fulfilling the present export orders in time and securing new orders besides issuing directives to allow duty-free import of cotton and yarn from Turkey, India and Uzbekistan via land route. “This will help reduce the freight cost,” he said.

Arif Habib Limited analyst Arsalan Hanif said that currently textile companies were operating at maximum capacity on the back of excessive export orders but shortage of cotton and a surge in freight cost were acting as hurdles in the way of smooth functioning.

Published in The Express Tribune, September 8th, 2021.

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