LAHORE - Pakistani spinners have turned to be the largest buyers of Indian cotton, purchasing more than 2.5 million bales during 2015-16 season, despite 9 percent import duty.

The country faced almost 40 percent cotton shortage, which panicked the textile millers who rushed for Indian fibre.

Market sources said that Pakistani cotton importers left China behind this season, which earlier was the largest buyer of India cotton.

According to latest data of Indian Cotton Federation (ICF), cotton exports to China from India plunged by over 50% in 2014-15 but this exports figure now makes 40 percent of total Indian fibre shipments of 6.5 million bales in 2015-16.

Earlier in October-December 2015 quarter, Pakistan replaced Bangladesh to be the largest buyer of Indian cotton on the back of a sharp decline in its domestic production due to widespread crop damage from whiteflies.

According to the data of BD Textiles Commissioner’s office, Pakistan imported 1.66 million bales of cotton from India during the December 2015 quarter. This works out to 47 per cent of India’s overall fibre exports to the tune of 3.52 million bales. In the same quarter last year, India’s total cotton exports stood at 1.93 million bales with Pakistan’s contribution coming in at 0.38 million bales, market sources said.

The All Pakistan Textile Mills Association (APTMA) Punjab Chairman Aamir Fayyaz observed that the cotton production had fallen by 40 percent last year, resulting a decline of 15 percent in sowing this year. He added that the textile industry was highly dependent on imported cotton now. Therefore, duties and taxes on import of cotton would make the entire value chain uncompetitive. “This situation calls for the withdrawal of 4 percent customs duty and 5 percent sales tax on port of cotton,” he stressed.

He urged the government to resolve the textile industry issues and enable the industry to undertake investment worth $1 billion per annum.

It is highly unfortunate that $15 billion  export-oriented textile industry, employing 15 million work force and consuming 15 million cotton bales is being strangled to death   in Pakistan only due to the lack of focus of government and rising burden of taxes on exports,” he added.

He said Pakistan exports have nosedived by $3 billion during the financial year 2015-16, out of which a drop in textile and clothing exports was $1 billion.

He said it is worth pointing out that the textile and clothing exports of Bangladesh and Vietnam have registered an increase of $2 billion and $4 billion respectively during the same period.

He further apprehended that the exports in Pakistan would continue declining unless the cost of doing business is lowered by the government.

The APTMA Punjab chief also demanded for liquidation of all the pending refunds of the textile industry to discharge liabilities and process further export orders.

He said the government should also provide DLTL to all exports to mitigate the incidentals of innovative taxes and levies.

According to him, the industry cannot export the GIDC on gas and surcharges on the electricity and the prevailing odd circumstances demand their withdrawal to revive competitiveness in line with the regional competitors.

“The government should notify the NEPRA-determined tariff without the incidents of surcharges.

He has expressed the hope that the government would prioritised the textile industry in its policies to produce exportable surplus, double textile exports and create three million additional jobs in the country.

Pakistan Readymade Garments Manufacturers & Exporters Association (PRGMEA) chief coordinator Ijaz Khokhar said that current cotton scenario is pushing garment manufactures downhill because of non-availability of cotton yarn in domestic market, as mills are reluctant to quote us despite the fact that we are ready to purchase yarn at prevailing high market prices. He added that spinning mills have been holding stocks on the prediction that prices will go further up amidst high additional regulatory duty on import of cotton yarn.

Khokhar said that garment exporters were getting nervous to make the shipment well in time due to artificial scarcity of raw material, forcing the buyers to go to other countries, offering lower rates, leading to the collapse of Pakistan’s industry.

“The spinning sector has always advocated for a free market mechanism, but where is the free market now?” he asked.

Industry demands immediate removal of regulatory duty, custom duty and other taxes on import of yarn form all countries.

There is no harm to import raw material from anywhere because our cotton yield is also 30% less than the last year with lower prediction for current year.

So, strong interaction is need to be developed between the government and stakeholders for rectifying the textile policy 2014-19.