Pakistan textiles would earn $4 billion additional this year only on increase in its locally produced basic raw material (cotton) rates, while another $1 billion would be added due to EU tariff concessions taking the textile exports to $15 billion.
Chairman All Pakistan Textile Mills Association (APTMA) Gohar Ejaz stated this after the first meeting of central executive committee of APTMA. He said farmers got Rs 260 billion from last year crop size of 12.7 million bales. "This year they would pocket Rs 400 billion from same crop size due to increase in global cotton rates" he added.
The increase in cost would be reflected in higher export prices, he said. He said exports could reach much higher level if the government withdraws 6 per cent duty of polyester fiber that can be used as alternate fiber to cover the unexceptional shortage of cotton in the global market. He said in view of exceptional stress on fiber availability the government should waive all duties on polyester for at least one year.
He said the demand of polyester fiber in domestic spinning industry is over 40000 tons, while the production capacity of local operating industry is 30000 tons. He said many countries are now blending cotton with polyester to cover cotton shortage. "Our planners surprisingly increased the duty of polyester from 4.5 per cent last fiscal to 6 per cent this year" he regretted. Moreover he added there is no refund of duty on export of polyester although all exports in Pakistan are zero rated.
Chairman APTMA said CEC is optimistic that despite flood loss the cotton crop size this year would be same as last year. He said industry would still need to import 2 million bales to cover the gap between local supplies and demand. He said despite shortage of cotton for the industry the 250000 cotton bales have already been booked for exports. However, he added APTMA strongly favours free market mechanism so that our farmers get global rates of their produce. He hoped that the government would not tinker with free trade concept, as it did last year.
He regretted that Indians have refused to entertain confirmed export orders of one million bales. "The government should take up the matter officially with the Indian government asking it to fulfil its commitments. Regarding concession on yarn and fabric by European Union, Gohar said as there is small spinning capacity in EU and Pakistan's yarn export to the region were only 62.7 million Euros. He said even 40 per cent increase in exports of yarn would have no impact on yarn availability in local market.
He said APTMA CEC believes that imposing reformed GST on entire value chain of textiles would be counter productive and create acute cash crunch for the industry. He said RGST should not be imposed on spinning and weaving sectors that are fully documented, as 85 per cent of what they produce is exported.