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KARACHI: Pakistani spinning industry on Thursday asked government to remove a quantitative restriction from export of yarn, as it will only harm the textile value-adding chain in the long run.
The Ministry of Textile reduced yarn export quota to 35,000 tons a month from previous 50,000 tons from March in a bid to depress its price in domestic market and support garment makers, All Pakistan Textile Mills Association (Aptma) said on Thursday.
“This policy of cross-subsidising the downstream industry at our cost is not justified in any way,” said Shahzad Ahmed, Acting Chairman Aptma. “It does not make any economic sense either.”
There is no restriction on import of yarn. Good cotton harvest and government subsidies in countries like India have led to yarn imports in Pakistan where most of the spinning mills are running in losses.
Government had fixed quota for monthly export of yarn earlier this year after its price shot up, upsetting equally powerful garment makers who bring in most of the foreign exchange revenue. The restriction is supposed to expire in June next.
Though depreciation of Pak rupee has made local spinners relatively competitive, a shortfall in cotton supply has diluted that gain. Shehzad said about 4 million bales have to be imported to meet consumption of 16m bales. Domestic production is around 13m bales. “Cotton is our main ingredient. When its export is allowed, why imposing restriction on yarn’s export?”
Government allows export of cotton to help farmers reap benefits of better international price. But APTMA says spinners have actually paid more to farmers in times of distress.
Naseem Usman of Karachi Cotton Brokers Forum said price of cotton has moved up by over 70pc to Rs5,700 per maund in past few months.
S.M. Muneer, another Aptma member, decried that downstream textile industry was getting discounted loans and government rebates. “If government still wants to subsidize them, it should do it from the budget.”
Aptma has called a meeting of all its members in a week’s time to discuss the situation and propose recommendations to government.
Pakistan’s total textile exports dropped slightly to $5.813 billion in July-Jan 2009-10 compared to $6.017bn, according to State Bank of Pakistan (SBP). Crippling energy crisis, terrorism and high interest rate has badly affected the industrial output.
05 March, 2010 by admin