Textile sector calls for withdrawal of duty on yarn

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October 21, 2015 KARACHI: Value-added textile sector on Monday called the 10 percent regulatory duty slapped on cotton yarn import from India as its death warrant, demanding of the government to withdraw it.

Chairmen of all value-added textile associations, in a joint meeting at the Pakistan Hosiery Manufacturers Association, opposed the duty, which they said will increase their cost of doing business.

The federal government imposed the regulatory duty on yarn import from India on Saturday last week after the All Pakistan Textile Mills Association (Aptma) announced a countrywide strike to close its 400 member spinning mills.

The meeting said that the government’s decisions, except the reduction in long-term financing facility and export refinancing rates, only supported the spinning sector.

The duty decision will jack up the cost of goods produced by the value- added textile sector.

It was noted, in the meeting that the biggest crisis is in the value-added sector, which exports 80 percent of total textile exports in monetary terms. The participants said their viewpoints were completely overlooked.

In fact, the Saturday’s meeting will enhance the cost of value-added products by three to four percent as yarn prices go up in proportion to the rise in duty. The meeting appealed to the finance minister to review its decision of the regulatory duty imposition.

Meanwhile, Chairman Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) Sindh-Balochistan zone Irfan Ali sent letters against the duty to the prime minister, finance minister and chairman of Federal Board of Revenue.

Reacting over the government's decision, Ali said exports are already declining and an additional input cost will be a death warrant for the most important foreign exchange earning sector.

He appealed to the government not to make any decision in isolation or just to meet the demands of Aptma.

Ali of Aptma demanded of the government to reimburse refund claims to the tune of Rs12 billion of garments exporters stuck with the government against DLTL (drawbacks of local taxes and levies), sales tax and duty drawbacks.

He said the garment exporters are facing multiple issues despite being the largest exporting industry and highest employment provider.

First and foremost is the issue of pending DLTL claims jeopardising the key initiatives of the textile and trade policies, he added.

Ali said currently around Rs12 billion of exporters’ claims are pending with the government, but none of the concerned authorities have settled a single penny despite an outlay in the current budget.

He said PRGMEA’s officials had met with the member sales tax and customs several times but to no avail.

He said instead of resolving their energy crisis, the government entangles exporters into meaningless administrative procedures, which divert them attention from the main activity exports.

“The government should play a role of business facilitator instead of a regulator,” he said.

He warned the government to mend its ways as all the economic indicators are showing negative trends.

“The government should provide a level-playing field by reducing gas and power supply rates to the industry to help exporters cut their energy costs and release billions of rupees stuck in sales tax refunds,” he said.

Mills are not processing their fabric and the sewing units could not guarantee timely deliveries of export shipments due to gas shortages.

“We cannot compete with Bangladesh let alone India or China with this productivity level,” he said.

The government envisaged increasing Pakistan’s exports annually by one billion dollar after getting generalised scheme of preference plus status. However, exports plunged during the last several months mainly due to the ongoing energy shortage.:sad:

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