ISLAMABAD: According to Asif Siddiq, Founding Member & Patron-in-Chief of ‘Pakistan Weaving Mills Association’, weaving sector, especially indirect exporters who supply goods to the exporters, are suffering and almost on the verge of collapse due to the discriminative policies of the government.
Exporters have been allowed to import yarn at zero percent duty and no income tax and sales tax while the indirect exporters have to pay 15% custom duty and 1% income tax. Due to shortage of cotton in Pakistan and high input cost, the weaving industry is relying mostly on imported yarn from India, China, Indonesia and Turkey.
With this kind of policy, government has completely taken the indirect exporters out of the market. In other words, all trading activity, which is a backbone of any industry has come to halt and now all weavers are on the mercy of the exporters to get the yarn from them and only run their machines on overhead basis.
In addition to this, the financially weak exporters who were relying on traders and indirect exporters to provide them fabric, are going out of business. The government needs to immediately make an even playing field for the direct & indirect exporters and consult all the stakeholders before making policies of this sort to safeguard the industry.
He was addressing Extra Ordinary General Meeting of PWMA held at SITE Area in presence of Ifan Moten, President PWMA, Yousuf Prince, Sr. Vice President, Khalid Riaz, Vice President and other senior members of the association Abdul Jabbar Dalal, Hussain Moosani, Muhammad Hanif, Naveed Wahid, Faraz Pervez and Ahsan Arshad Ayub.
He further stated that the textile package which is about to be announced by the Government should address the above issue raised by our association and incorporate the same in the package. Also, we highly recommend to allow the refund of sales tax input on the packing material to lower the cost of exporters and make our prices competitive in the international market. This disallowing is unnecessarily increasing the cost of our goods to our buyers and violate the basic premises behind making the textile sector zero rated.
Government should also release sales tax refunds immediately so that textile sector can come out of financial crises. The refunds have been given till June of this year and since then no further refunds have been issued. Huge liquidity has been tied off resulting in working capital crises for the industry.
Pakistani textiles are unable to compete with their counterparts from India and Bangladesh due to the high input cost, which is obvious as Indian cotton prices are more than Pakistan but the Indian Yarn prices are cheaper by 5% to 10%.
Yarn has quite low value addition and the cotton constitutes almost 70% of their cost, even then, the Indian spinners are able to produce yarn at the lower price. Government should urgently resolve the textile crises by lowering the input cost, which is mainly utility cost. In the long run, the solution is only one and that is to increase the production of cotton in order to compete with our neighboring countries. India has tripled their cotton production in the last twenty years while Pakistan is producing about the same or lower than what it was once.
Asif Siddiq used this occasion to request Federal Minister of Textiles to intervene on behalf of this biggest export sector in Pakistan and urgently provide this sector relief which is badly needed as many mills are closing down resulting in unemployment and no further development in Textile sector. Government should take steps on war footings basis to enable textile sector to stand on its feet again.