Lack of credit line creates obstacle for powerloom owners to modernize

In Faisalabad, approximately 250,000 power looms and 80,000 auto shuttle looms are working. Most of these powerloom needs upgradation to product quality products with the grant of the Generalised Scheme of Preferences (GSP) Plus status by the European Union to Pakistan.

The major obstacle in the way of owners of outdated power looms is the lack of credit line – a necessity for upgrading their machinery to meet the growing demand for grey fabric in European markets.

The benefits that the 10-year GSP Plus status entails are huge for the textile industry, especially for grey fabric manufacturers, but these largely depend on the ability to produce products of international standards.

Many businessmen have been doing business in the domestic market while banking on outdated machinery, said exporter Ikhlaq Ahmad while talking to The Express Tribune. Now that the demand for grey cloth is weakening here, they are targeting inroads into European markets.

Though many big investors are replacing their power looms with modern technology, small factory owners are lagging behind as they do not have enough capital to bring in state-of-the-art machinery, according to Ahmad, who has recently started exporting grey fabric.

The investors who have shifted to shuttle looms are making good fortunes. Russian auto shuttle looms cost between Rs400,000 and Rs900,000 apiece, depending on their size. Swiss machinery, which is pricey, fetches Rs1.5 million.

Market players say many small investors are selling their old machinery to scrap dealers and many others are opting for latest Russian and Swiss technology. This year, the export of textile goods could increase further, if power loom owners are offered much-needed credit line. On the other hand, the discarded old power looms are aiding the business of scrap dealers.

Faisalabad – the textile hub of Pakistan – has become a paradise for scrap dealers as a growing number of investors are getting rid of the outdated stuff, said Tanveer Ali, a power loom owner.

The advantages of the GSP Plus facility would not come easy. Scarcity of gas and electricity is causing huge losses to the small factory owners, many of whom have shut down their business.

Processing of grey fabric includes dyeing, printing and other processes which depend on gas. With gas coming for just 48 hours in a week, the manufacturers cannot deliver orders on time.

Demand from dyeing mills for grey cloth has dropped to almost nothing and most of the mills, which rely on gas-powered machinery, have closed down and the rest are running on half the capacity.

The government has recently announced that it will ensure gas supply to industrial units during winter. However, according to some mill owners, the supplies are only going to members of the All Pakistan Textile Mills Association, terming it discriminatory.

According to Waheed Ramay, Chairman Council of Loom Owners Association Faisalabad, the power loom industry has collapsed in the domestic market because of a plunge in demand. However, fabrics made by auto shuttle looms are in great demand in the international market and to grab this opportunity many new investors have started investing millions of rupees.

The GSP Plus status is a great opportunity to enhance exports of grey fabric, but apprehensions remain.