The All Pakistan Textile Mills Association (Aptma) has strongly criticised the government for imposing 15 per cent regulatory duty on export of cotton yarn. This will result in large scale closure of spinning mills, which could not afford to produce yarn from expensive imported cotton and sell it at lesser price.

This was stated by the Aptma central chairman Anwar Tata, while talking to Dawn on Thursday. He said that the spinners were at a loss to know on what basis and wisdom the government had imposed duty on yarn export.

According to the track record, he said, on an average the country exported 50,000 tons of yarn per month during last ten years, which indicates that there would be surplus of yarn in the country per month with no outlet to sell or to be consumed.

Mr Tata further said that as to how the industry would survive if it has to import cotton at higher price from the world market and export it on paying 15 per cent regulatory duty, particularly when profit margin of the spinning industry is not more than 2 per cent.

The Aptma chief said there was no reason the spinners keep producing yarn when there is no market. He said that for the last 40 years Pakistan had been the largest player in the world yarn market with assured supply and quality of the product.

The spinning industry, he said, is not getting any sort of support from the government in the shape of subsidy or cheaper export refinance as the value- added textile sector has been enjoying over the years.

As a result of this, the spinning industry had been the biggest defaulter of bank loans and most of the non-performing loans are related to this industry. The spinners would not like to close the industry but the government's decision to impose R/D will ultimately compel the industry to wind up, he added.

He said if the government wanted to support the downstream textile sector it should have given it from its own pocket and not at the cost of the spinning industry.

He reiterated the spinners' firm decision not to import costly cotton to accumulate losses and alternatively, it will have to close down their units. He declared that during next two months there would be no export of cotton yarn and consequently, the country will lose around $200 million per month in yarn exports.

Meanwhile, the downstream textile industry has reiterated its demand for imposing a total ban on yarn exports till such time the position of next cotton crop is cleared with regard to its size and output.

In a meeting held on Thursday under Pakistan Apparel Forum the leaders of value-added textile exporters associations appreciated the government for taking a step in the right direction by slapping regulatory duty on yarn exports.

However, they reiterated their demand that there should had been a total ban on yarn exports to save the local value added textile sector, which had suffered immensely for the last eight months.

They suggested to the government that if a total ban on yarn exports was not possible then the rate of regulatory duty should be enhanced from 15 to 30 per cent, which would ensure the availability of yarn in the domestic market.

These leaders decided to temporarily call off their strike what they described in the larger benefit of the country.

Duty notified
Amin Ahmed adds from Islamabad: The federal government on Thursday issued a notification to levy a regulatory duty at the rate of 15 per cent ad valorem on export of all types of yarn for 60 days with immediate effect.

The notification issued by the Federal Board of Revenue, reads: Provided that no regulatory duty shall be levied on export of yarn made from the material temporarily imported under the facility of Notification No SRO 492(I)/2009 dated June 13, 2009, DTRE as provided under sub-chapter 7 of Chapter XII of the Customs Rules, 2001 and the scheme of manufacturing bonds as licenced under Chapter XV of the said rules.

The cabinet committee on textiles at its meeting in Islamabad on Wednesday deliberated upon the latest situation regarding production, export trends and availability of yarn for value-added industry.

The imposition of duty was decided for improving availability of yarn in the domestic market.