KARACHI: All Pakistan Textile Mills Association (APTMA) has strongly opposed the suggestion of Zubair Motiwala, Chairman CAPTA to stop the four-percent rebate on the export of yarn, which is to be provided by the government on the basis of Drawback of Duties, Local Taxes & Levies on Exports.
Motiwala presented this suggestion at a recent meeting with Haji Muhammad Akram Ansari, Minister of State for Commerce & Textiles.
In a statement issued on Wednesday, Zahid Mazhar, Sr. Vice Chairman, APTMA said that the spinning sector is the backbone of the textile value chain, and has faced the brunt of high cost of doing business in the last few years, which has made it unviable.
Today, the spinning industry is incurring heavy losses by selling yarn below its cost due to poor demand from the domestic consumers. The production of yarn is substantially more than the local consumption; therefore, their exports must be encouraged at all costs, otherwise it will result in permanent massive closure of mills and resultant unemployment.
Zahid Mazhar in support of his argument of supporting the export of yarn, said that as per data of Pakistan Bureau of Statistics, total production of Yarn in the year 2016-17 was 3,428,730 tons whereas cotton yarn exported in the same period was 455,345 tons i.e. only 13.28 percent of the total production of the year.
Similarly in the year 2015-16 total production of cotton yarn was 3,405,559 tons whereas only 12.44 percent or 423,624 tons were exported. Thus about 87 percent of cotton yarn produced in the country is already available for the local market whereas the domestic downstream industry consumes only about 70 percent of the total production of yarn.
On the other hand the surplus 30 percent of the total production of yarn produced in the country which is excessive to the domestic consumption, if not exported would lead to a large scale closure of spinning mills and increase unemployment. The domestic consumers of yarn should not expect the spinning mills to subsidies their costs by providing them yarns below cost, rather they should explore other avenues to increase their margins.
He added that a win-win scenario can be achieved when the government makes serious efforts and succeeds in increasing the size of the annual cotton crop to 20 million bales following the example of India, which on the one hand will boost the income of the farmers and on the other hand reduce the input costs of all the sectors of the textile economy. This will also increase our textile exports and the national GDP drastically.
