The All Pakistan Textile Mills Association has made it clear to the government that its members are unable to pay the Gas Infrastructure Development Cess (GIDC) because it will not only hurt the textile industry at large, but will also result in total closure of units located in Sindh and Balochistan. On another note, the cotton prices have come under pressure in the domestic market as mills are facing slow demand of yarn while the cost of doing business has gone up. According to newspaper reports, the country’s textile industry is not in a good shape, as increase in gas rates and slow yarn sales have damaged its sustainability. The experts noted that liquidity with the domestic industry is very tight and many mills are said to be facing day to day payment crisis as some are selling yarn at lower rate on credit basis. The market watched decrease in cotton prices by about Rs 100 per 37.32 kilograms as mills are under pressure. Only about 100,000 to 125,000 bales of unsold cotton crop of the current season remains with the ginners. Reports also suggest that the global cotton prices have also subdued due to decrease in demand.
According to reports, the general price idea of lint from Sindh ranged lower from Rs 4,800 to Rs 5,500 per 37.32 kilograms, while in the Punjab the lint prices are the same as Sindh in a lackluster market. It is also reported in the media that sowing of the new cotton crop is good and small quantities of seed cotton arrivals may start in July 2015. Some forward sales of the new cotton crop have also been reported from Punjab. Many mills are now obliged to buy cotton on credit while mills are selling their cotton stock to other mills. There are reports that due to high cost of production some spinning unites have closed down while a few spinning units have also closed down due to drop in yarn sales. Pakistan is one of the largest cotton producing country in the world, earning over 50 percent of the export revenue. APTMA has also conveyed to the government that Gas Infrastructure Development Cess (GIDC) Act 2015 will result in the closure of the export–oriented industry which is likely to create a disturbance of law and order in the country.
The government wants to enhance its revenue, but choses unpopular methods to achieve its targets. When foreign investors are taking interest in collaboration with Pakistani businessmen, the extra burden on the local industry will serve no good to the economy.