Value-added textile sector, spinners differ over cotton yarn import duty

KARACHI/LAHORE - The Value Added Textile Associations (VATA) has demanded withdrawal of 5 per cent duty on import of cotton yarn.
Chairman Pakistan Apparel Forum and spokesman of VATA Muhammad Jawed Bilwani, flanked by more than dozen members of association, at a press conference on Friday, said that the spinning companies were making profits and there is no report of any closures while the value added textile industries have been suffering huge losses and several of them have been compelled to close down just because of high costs of doing business. 5% duty on import of cotton yarn is adding to burdens.
There has been mass closure of weaving units. If cost of doing business especially of price of raw material is brought down then exporters will get orders from foreign buyers resultantly weaving units will get business from the exporters and will save those weaving units which are on the verge of closure”, he maintained.
He said that our value added textile exporters who participated in Heimtextile bagged considerable orders but it is evident that their costs which they calculated will be greatly affected when the yarn in the local market will be expensive. Similarly, he said, several sportswear manufacturers and exporters from Sialkot who participated in the prestigious sportswear exhibition Texworld Turkey held in Istanbul Turkey and bagged orders will also be affected likewise.
It is really surprising that our business friendly government is not providing any protection to the vital value added textile sector suffering huge losses while it is pampering and protecting the profit making Spinning Sector, he said.
He said that the spinning sector has always been advocating for “Free market mechanism”. Where is the free market mechanism now? Bilwani stated that actually the government should impose duty on export of cotton yarn.
The value added textile export sector demanded that in case the government desires to continue the import duty on import of cotton yarn then government should also impose duty on export of cotton yarn or vice versa there should be no duty either on import of cotton yarn as well as export of cotton yarn because under the prevailing circumstances, the vital value added textile export sector which earn largest amount of foreign exchange for the nation and generates the huge employment, would be completely ruined.
On the other hand, APTMA, mainly representatives of spinners in the country, has demanded the imposition of 15 per cent regulatory duty on entry of subsidised fine count cotton yarn, predominantly from India. However, the import under DTRE or manufacturing bond should be exempted from regulatory duty, as APTMA believes in free market mechanism and the regulatory duty should be exclusively meant for domestic industry on domestic use of fine count cotton yarn.
Chairman APTMA was addressing a meeting of the manufacturers of fine counts cotton yarn at APTMA Punjab office. The spinners expressed deep concerns over heavy influx of highly subsidised fine count cotton yarn from India with more than 25% subsidisation, affecting the viability of as many as 30 local mills, exclusive producers of fine count cotton yarn. Besides, adverse implications are looming around on the while in the yarn market, he added.
He said the Indian textile industry experts have analysed the impact of subsidy on production of fine counts cotton yarn in the State of Gujrat and stared that the Indian manufacturer gets Indian Rs26.72 per kilogram on subsidy in the form of interest rate subsidy, electricity subsidy, VAT benefit, duty exemption on electricity bill, CST on yarn, transportation of cotton and yarn and power cost besides the central subsidies. The total value comes to around Indian Rs12 crore per annum on a mill of 25000 spindles, the study has revealed further.
Chairman APTMA further said that it is alarming to note that annual import of fine count cotton yarn from India has reached to 30000 tones in 2014 against 6500 tones in 2012. The import data of first six months of current fiscal suggests that 3000 tones per month fine count cotton yarn from India is entering Pakistan, he added. He said 90% of imports are originated from India, which is extending unstructured rebate to its manufacturers.
According to him, India is capturing Pakistan’s domestic market by design, as the end product of fine counts cotton yarn is meant for domestic consumption. Pakistan-based 30 mills have a production capacity of 6000 tones per month while India is dumping subsidised 3000 tones fine count cotton yarn on an average per month.  India may start sending processed fabric in the long run in case no immediate action is taken against the entry of combed fine count cotton yarn from India, he added.  He has urged the Ministry of Textile Industry to spearhead and protect the textile industry on long term basis.

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