ISLAMABAD: Some officials backed by powerful cotton hoarders’ mafia in the government have become powerful enough to either cause more delay in implementations of the decisions taken by the Economic Coordination Committee (ECC) and Federal cabinet or negate their orders at the cost of mammoth loss to textile export.
In the latest development, the authorities concerned are not inclined to follow the ECC and federal cabinet decisions on the issue of import of cotton with zero duty. As per documents available with The News, the ECC on January 5 approved zero rating for import of cotton.
The federal cabinet had also endorsed the ECC decision but interestingly the authorities concerned backed by the powerful mafia of cotton hoarders are in state of denial, as the required SRO has not been issued as yet for the withdrawal of 4% customs duty and 5% sales tax even after a lapse of almost two weeks.
“This added difficulty has further eroded the textile industry’s resilience and would adversely impact the export targets, increasing pressure on the ever worsening balance of payments crisis,” a textile ministry official said.
“The government should not become hostage to black marketeers and hoarders of cotton in the name of support for the farmer, as further delay on issue of the SRO would be catastrophic and damaging for the image of the prime minister,” he said.
Relevant officials in the textile ministry disclosed that some influential MNAs hailing from South Punjab were said to have hoarded one million cotton bales and were pressurizing the authorities concerned to further delay the implementation of decision taken by the prime minister.
The Ministry of National Food Security, responsible for issuing the SRO says it is examining the decision of ECC and federal cabinet and will implement it in letter and spirit.
However, owing to inordinate delay in issuance of said SRO, the textile industry, which is already in the red zone on account of high energy cost and high cost of doing business, is feared to face more loss.Textile industry is in need of imported cotton with zero taxes to meets the export orders but delay in issuance of SRO with zero duty for import of cotton is multiplying the miseries of industry.
It is pertinent to mention that the import of cotton was allowed at zero rate on January 10, 2017 under the PM export-led growth textile package. However, this facility was withdrawn in May 2017 to protect the domestic farmers and 4% customs duty and 5% percent sales tax on import of cotton was imposed with the assurance that duty-free import of cotton would be allowed by the 1st of January 2018.
At that time, cotton production estimates were suggesting 12.6 million bales against the actual production of 11.3 million bales as of 15th January 2018. According to the textile industry circles, domestic cotton production has again failed to meet the target.
The quantity, especially the quality of cotton, has deteriorated to the worst levels seen in recent years. The industrial consumption is around 15 million bales, shortage of 3.5 to 4 million bales has to be met through import.
On account of ECC decision, many shipments of imported cotton have started arriving at the Karachi Port and there are reports of severe congestion there due to delay in the issuance of zero-rated SRO. The textile mills are paying heavy demurrages every day.