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APTMA: Cotton crop failure has increased cost of doing business

As per the Senior Vice Chairman of the All Pakistan Textile Mills Association, Zahid Mazhar the news appearing in sections of the print media quoting the Pakistan Apparel Forum representative that an increase in prices of cotton yarn will have a direct bearing on exports of value added products is baseless and misleading. He noted the widespread resentment regarding the increase in prices of yarn in the domestic market does not paint an accurate picture. He says due to cotton crop failure for the third consecutive year and resultant increase in prices of cotton has increased the cost of doing business of the spinning sector of the country. They are now compelled to meet about 30 per cent of their consumption requirement through import.

Further the imposition of 4 per cent custom duty and 5 per cent sales tax on the import of cotton has further increased the cost of doing business which is already high, compared to competitors in the region, which is the main reason behind the recent upward spiralling price of yarn in the country.

 Mazhar disclosed the spinning sector, which is the backbone of the textile value chain, has faced the main brunt of high cost of doing business in the last few years. This has made it unviable. Today, the spinning industry is incurring heavy losses by selling yarn below its cost due to poor demand from domestic consumers. Production of yarn is substantially more than the local consumption, therefore, their exports must be encouraged at all costs, otherwise it will result in permanent closure of mills and resultant unemployment.

Due to this about 140 textile spinning mills have already closed operations resulting in one million workers losing their jobs and another 75 to 80 mills are on the verge of closure. This will add to the unemployment figure by another 0.5 million, he added. The measures taken by the government is only helping the Indian textile industry, as is seen in the exponential rise in import of yarn from India. Due to the closure of these mills Pakistan’s textile exports is also suffering a loss of over $4 billion per annum, he added.

 
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