$43 million towels orders diverted to India and Bangladesh

The towel export orders worth $43 million have been diverted to India and Bangladesh during the first quarter of the current fiscal year due to high cost of production in the wake of soaring prices of cotton and cotton yarn.

Exporters said that increasing cost of production due to high electricity and gas tariffs, rundown civic infrastructure in the industrial areas, soaring prices of cotton and cotton yarn and pending huge sales tax returns were the primary reasons behind diversion of the orders.

Though high cost of production is an old issue now, the present surge in the cotton and cotton yarn prices have made the towel products further costlier for exporters to finalize export deals with foreign buyers.

In addition, they said, the country received another huge setback in the shape of fresh diversion of $4 million export orders of towel products toward India and Bangladesh in November due to break of deals with an Italian buyer.

Chairman of Towel Manufacturers Association (TMA) Muhammad Muzzammil Hussain said that India and Bangladesh both countries are having an edge over Pakistan in world markets, while China has recently entered the EU and US markets to occupy major share of bed-wear exports. Expressing concerns, he said that such mounting challenges in the world markets and high cost of production, besides lack of support from the Government in the country, had brought the towels industry on the verge of collapse.

Indian Government has given a rebate of 10% to its exporters and Bangladesh, at the same time, enjoys the benefits of being the least development country (LDC) in the European markets.