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India 'cripples' Pakistan's textile industry.

Pakistan, the world's fourth largest cotton producing country, is facing decline in textile products by 8 per cent, whereas exports of non-cotton producing countries like Bangladesh and Vietnam have surged significantly. Keeping that in view, the All Pakistan Textile Mills Association (Aptma) has urged the government to immediately remove 4 per cent customs duty and 5pc sales tax on cotton imports to help the spinning industry stay competitive. On the other hand, the Pakistan Readymade Garments Manufacturers and Exporters Association (Prgmea) has sought immediate removal of 10pc regulatory duty, customs duty and other taxes on the import of yarn form all countries. Aptma Chairman Tariq Saud in a statement said the government had imposed regulatory duty because Indian mills were dumping cotton yarn into Pakistan.

This was the only protection available to the Pakistani industry while protecting the rights of genuine value-added exporters who could utilise the facility of Duty and Tax Remission Scheme (DTRE) to carry on their business unhindered. This policy has proved successful and garment exports have registered a 5pc increase. India, on the other hand, has imposed a 26pc import duty on Pakistan cotton yarn and unless we get reciprocal market access there is no other way except imposition of regulatory duty on imported yarn, observed Mr Saud. He added that duty taxes remission on exports (DTRE) had surged by over 800pc for which "we have no protection". "High cost of doing business and tariff subsidy to yarn exporters of India have also crippled Pakistan's textile industry, especially the spinning and weaving industry," he said.

He also reminded the government that exports of cotton yarn plunged by 32pc year-on-year during the first 11 months of 2015-16, mainly due to non-availability of raw cotton because of 35pc fall in output and import duty of 4pc and sales tax of 5pc on imports. Chairman APTMA urged the government to address the issue of high cost of doing business and immediately remove 4pc customs duty and 5pc sales tax on the import of cotton which will enable spinning industry function properly instead of being crippled further by removal of Regulatory Duty. Free trade in cotton will serve the interests of all segments of the textile chain and also protect the interests of the growers. Pakistan being a key player in cotton needs to remain in line with the international market situation and it is imperative that the stability is maintained so that the entire chain can work seamlessly.

The downstream sector must appreciate the Pakistani mills for their commitment as they cannot rely on the Indian mills who have backed out of their contracts due to rise in cotton prices. Chairman APTMA further said that the rise in the cotton prices is due to a sudden jump in international and domestic prices of cotton. In another statement, Prgmea chief coordinator Ijaz Khokhar said the apparel industry had been facing severe shortage of cotton yarn at a time when international buyers were planning to place orders for Christmas. He said the local garment industry was not capable of entertaining the international market generally due to price factor and especially because of artificial shortage of cotton yarn created by the spinning as well as ginning industry which were holding stock in the hope of further hike in rates.

"Overburdened by more than 11pc multiple taxes and utility cost, the apparel industry demands at least 15pc special support to stay in the international exports market. Otherwise, all current business will be shifted to other countries," he said. He requested the prime minister to direct the ministries concerned to focus on the value-added sector and prepare a solid strategy to help the industry stay afloat. He said that apparel export sector was under severe pressure due to hard competition in the international market from the countries like Bangladesh, Vietnam and Cambodia. "The current cotton scenario is pushing garment manufactures downward because of non-availability of cotton yarn in domestic market, as mills are reluctant to quote us despite the fact that we are ready to purchase yarn at prevailing high market prices. Spinning mills have been holding stocks on the prediction that prices will go further up amidst high additional regulatory duty on import of cotton yarn," he said.

Ijaz Khokhar said that garment exporters are getting nervous to make the shipment well in time due to artificial scarcity of raw material, 'forcing our buyers to go to our competitor countries, offering lower rates, leading to the collapse of our industry'. He said that the value-added textile exporters, who had constantly been participating in world fairs like in Germany and Turkey, and bagging a considerable amount of orders, can take a hit if local yarn prices remain high. "The spinning sector has always advocated for a free market mechanism, but where the free market is now?" he asked. Industry demands immediate removal of regulatory duty, custom duty and other taxes on import of yarn form all countries. There is no harm to import raw material from anywhere because our cotton yield is also 30pc less than the last year with lower prediction for current year.

So, strong interaction is needed to be developed between the government and stakeholders for rectifying the textile policy 2014-19 "The apparel industry is in fact the producer of finished textile products that need protection, as it contributes more than 80pc to the total textile exports and employs up to 38pc of the total workforce of the country. The textile export of Bangladesh is touching $26 billion without growing a single cotton bale and completely depending on the imported yarn, he added.
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Publication:Flare
Geographic Code:9PAKI
Date:Aug 31, 2016
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