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Impact of Covid-19 on Textile Industry

By: Tooba Tariq   

Covid 19 impacted almost every industry of the world. Overall growth started decliningstarting from least impacted sector such as Agriculture tomost effected Industries were Manufacturing and Services. Estimated 80 percent Companies reported direct loss due to Covid.Pakistan is considered one of the most popular Country in terms of its textile Industry. Its stands Eight in largest textile exporter globally. Overall share of Textile industry in GDP is 8.5%. Some popular products from this sector includes home textile, fabrics, spinning andfinished garments.

Textile industry in Pakistan has been facing several challenges starting from basic Supply of the Raw materials which was cut off due to mobility restrictions within country limiting Textile industry to existing stock of the material. Basic Imported items such as Machinery and Chemicals dyes were on hold while locally sourced raw material such as cotton had to be used wisely with remaining Inventory due to increasing lead times to reach the Production facility. This whole scenario caused factories to shut down until they could restock on raw materials.

Demand Reduction was observed in overall economy. This resulted in reduction in flow of revenue. Demand reduction was a result of Diverted attention towards the Chaos caused by the Rising cases of Infected Patients and Deaths. Low demand was due to lockdown country wide restricting people from normal retail shopping. Less economic activities within country reduced buying power of consumers. This overall pushed many companies out of business and some in a major loss.A popular Local Textile Brand reported Rs. 8 Billion loss in the first wave of Covid.

Textile sector in Pakistan earns up to 60 Percent of its revenue from exporting its products in foreign markets.Global Restrictions and Government regulations resulted in Shipment delays in finished products that were ready to be shipped and also raised concerns for future orders being cancelled. These delays resulted in Payment issues on buyer’s behalf causing liquidity issues for Textile Industry. The whole Textile industry in Pakistan was under the threat of their consumers shifting towards their competitors unless steps were taken to improve their service.

Textile sector in Pakistan employs roughly One Million workers. Overall layoff in the Textile industry started increasing as a result of not having flow of funds due to Pandemic situation. National Trade union Federation of Pakistan estimated that more than worker will lose their job without any financial benefit specifically south-eastern Sindh Province. Human Rights urged Pakistani Government to take necessary steps for smooth Production otherwise laborers from textile industry will become a financial burden.

Textile Industry owners suggested support by the Government in terms of Subsidy in Taxes, Reduction in interest on loans ,extending Loan payable time period, relief packages for factory workers and necessary policies to regulate Economic activities until the overall productivity is back on track.

The writer is student of MS – Supply Chain Management , Bahria University Islamabad.

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