You ViewsVOLUME 18 ISSUE # 41

Weaving sector contraction

The textile weaving sector is a vital contributor to the national economy, but is facing a severe economic contraction due to the disproportionately higher cost of electricity. This issue has become more pressing as we witness larger mills with subsidies and captive power facilities enjoying significantly lower energy costs, putting smaller enterprises at a grave disadvantage.

In this critical regard, there are a few points that the policymakers need to consider as they plan to bolster Pakistan’s exports. The main clients of Pakistani exports are experiencing a serious downturn of their own owing to recession across Europe and the United States, leading to decreased demand for goods. The decrease is so severe that even China, a leading global exporter, is grappling with dwindling exports due to the weakening demand in the West. If things are bad for China, they can only be worse for Pakistan.

Against this backdrop, it makes sense to strengthen the hand of small and medium enterprises (SMEs), which form the backbone of the national economy and provide employment to a significant portion of the population. Unfairly imposing higher electricity costs on these entities compared to larger entities that have benefited from easy loans under the temporary economic refinance facility (TERF) and have enjoyed captive power subsidies, is driving many SMEs, particularly the weaving factories, to the brink of closure.

The growing gap between the rich and middle-class entrepreneurs is a matter of concern as well. Unfair advantages granted to larger mills, such as captive power subsidies, perpetuate this inequality and contribute to a concentration of power within a few entities. The government needs to address the issue and level the playing field for one and all in the weaving industry. The survival of countless SMEs is at stake, and so is the case with the livelihoods of countless hardworking families who depend on them. The closure of SMEs results in increased unemployment and hardships.

The current distribution of captive power subsidies has to be reviewed. Policies ensuring fairness across the industry are required. A sustainable solution will not only protect the diversity and vibrancy of the national economy, but also contribute to a more just and equitable society overall.

Adil Hanif