By By Shahid Shah
The row between the two sides has deepened since value-added textile associations have urged the Trade Development Authority of Pakistan to slap a 5 per cent security deposit on yarn export. In October, export of raw cotton and cotton yarn increased by more than 30 per cent while knitwear and readymade garments’ shipment fell.
The Ministry of Textile has so far not been successful in addressing the issue of increasing yarn prices. Both spinners and value-added textile manufacturers are still unsatisfied.
Pakistan Hosiery Manufacturers and Exporters Association (PHMA) Chief Coordinator M Jawed Bilwani, in a letter to the Director General Textile and Clothing, has suggested that security deposit on cotton export should be increased.
This suggestion has come after the Ministry of Textile in a notification called for effective management and monitoring of all sorts of cotton yarn exports. The TDAP has also been requested to cap the quantity of exports on the basis of previous year’s export figures.
On the other hand, the All Pakistan Textile Mills Association (APTMA) has expressed concern over the government notification, the proposed cap on yarn export and levy of export duty on yarn.
According to the value-added sector, ban on the export of cotton yarn below 32 single count is the only way to save the dying value-added industry.
World cotton production is down by around 4.2 per cent this year while consumption is likely to increase by 2 per cent. “If local yarn is exported, there will be an acute shortage of raw material for the value-added sector, which may face shutdown,” Bilwani said.
The value-added sector has claimed that the production of 248 spinning mills operating in the country is no more than total requirement of yarn and there is no need for export.
However, the spinners say local consumption of yarn is 70 per cent of total production and the surplus 30 per cent is being exported which can fetch $1 billion. Bilwani said under the WTO regime Pakistan could restrict its cotton and yarn export as its two members India and China had already done that. WTO rules stated that export restrictions were permissible “for raw materials in order to protect or promote a domestic fabricating industry,” he said.
The textile sector employs 60 per cent of the labour force in the country, out of which the spinning sector employs 5 to 6 per cent and the value-added sector around 94 per cent.
Analysts are of the view that market forces should not be restricted from playing their part. The government can not always bail the value-added sector out, so they should improve their quality and compete with better prices rather than depending on cheap raw material.