Textile sector demands zero-rated import of hydrogen peroxide

KARACHI: Textile processing sector on Monday asked the government for permission as well as concessions for the import of hydrogen peroxide, an extensively used textile bleaching agent, the price of which spiked sharply following supply issues in the local market.

Salim Parekh, the central chairman of All Pakistan Textile Processing Mills Association (APTPMA), in a statement said the local manufacturers had abruptly reduced the supply of the chemical in the country, creating panic, as processing units were the major consumers of this industrial material.

“Keeping the situation in view, the commerce ministry is urged to allow us to import hydrogen peroxide for textile processing use only on a zero-rated basis until the local supply is back to normal in terms of rates and delivery,” Parekh said.

The APTPMA official said he feared that this hasty step, on part of local manufacturers, was bound to lead to further artificial shortage, and escalate the prices of the bleaching agent.

“Shortage of this chemical will adversely affect the export of value-added textile fabrics/ garments and deprive the country of valuable foreign exchange to the tune of billions of rupees, besides causing closures of hundreds of textile industrial units,” Parekh said.

He added that this problem emerged after Sitara Peroxide cut down its production leading to negative effect on the South Zone, particularly the small and medium enterprises sector.

The country's total demand of hydrogen peroxide is 4500 million tons/month, out of which 99 percent is consumed by textile industry. There are only two plants that produce this chemical in the country, Sitara Peroxide with a production of capacity of 2550 million ton/month and DESCON Oxychem with 2400 million ton/month.

The demand of hydrogen peroxide for textile industry of Northern zone (Punjab+KPK) is about 2200 M.Ton/month where as it is about 2300 M.Ton/month in Southern zone (Sindh+Balochistan); total demand of the Country is about 4500 million ton/month.

It is learnt that, M/s DESCON Oxychem is supplying 1175 million ton/month out of its total production of 2760 million ton/month to south zone which is 42 percent of its production. On the other hand M/s Sitara Peroxide is producing only 1780 million ton/month which is only 70 percent of its full capacity. Out of its current production of 1780 million ton/month, it is supplying only 200 million ton/month to south zone which is only 11 percent. Hence, the total supply to south zone is 1375 million ton/month i.e. a shortage of 925 million ton/month to the tune of about 60 percent is being faced by South zone Textile Industry.

Due to this acute shortage, the price fluctuation is very high and the situation may compel the small and medium enterprises sector to close, whereas, the large-scale manufacturing sector is surviving by importing the chemical through Duty and Tax Remission Scheme (DTRE).