The government just cannot catch a break. After being pushed into increasing duty on the import of cotton yarn, grey cloth and fabric, it now has to face potential wrath of the value-added sector.
The All Pakistan Textile Mills Association (Aptma), which championed the 10% increase in import duty on cotton yarn, had announced protests before the government decided to pay heed to its demands.
However, barely a few days have gone by and the government is now faced with a similar issue.
The value-added sector, which reacted strongly after the government announced the 10% levy, has now announced to observe a strike next month.
The value-added sector’s opposition to the regulatory duty deepens the divisions within Aptma that negotiated the increase in duty.
According to a factory owner, the current disagreement points at a war of interests among industrialists. The weaving industry believes that only spinners will benefit from this decision and garment exporters will pay high prices for their raw material.
The government, which was earlier charging 5% customs duty on yarn import, has now increased it to an effective rate of 15% from November 1.
Point of contention
The spinning sector pressurised the government to increase duty on yarn import, the weavers claimed.
It cited India’s example to further the case, pushing the government to implement the duty increase, weavers added.
Weaving industrialist and representative of Council of Looms Owners Association Waheed Raamy said that the sector will go on strike against the additional duty on yarn import.
He said that the price of an Indian 40-count yarn is Rs12,500 per 100 pounds, 52-count is Rs16,500 and 80-count is Rs24,000. In comparison, Pakistani yarn is 20% more expensive. Yarn count refers to the thickness of yarn and is determined by its mass per unit length.
On the other hand, garment manufactures and garments exporters are also opposing the decision of 10% regulatory duty. They added that orders from international markets were received three months ago, which would disrupt their cost structure.
“This duty is an additional burden, making the garment exporters uncompetitive in the international market.”
The weaving industrialists lament they were not adequately represented in the talks with the federal government.
On the other hand, Aptma Faisalabad region Chairman Naveed Gulzaar said that Indian yarn was hurting the spinning sector of Pakistan. “Indian government has imposed 28% regulatory duty on yarn imports to save its spinning industries.”
Published in The Express Tribune, October 28th, 2015.
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