LAHORE: Garment exporters have pledged to oppose the demand of spinners to re-impose a 5pc duty on yarn imports from India when the commerce ministry takes a decision on it at a meeting of the stakeholders on Tuesday (today).
The demand for withdrawal of the duty exemption on India’s yarn was made recently by Aptma to restrict its imports after New Delhi announced the 4pc rebate on its exports after the EU grant Pakistan GSP+ status.
“The rebate on its yarn exports means that India will become much cheaper than us, eroding our competitiveness,” former Aptma-Punjab chairman Shahzad Ali Khan told Dawn on Monday.
“India’s textile industry is already enjoying several incentives in the form of low energy prices, almost free credit, export rebates, etc that have allowed it to ‘dump’ its textile products in our market at the expense of domestic industry. Therefore, it is crucial to restrict the influx of its textiles in our market through withdrawal of the import duty exemption to protect our investment and jobs,” he argued.
However, the downstream value-added textile industry appears to be quite perturbed by the move. “If we’re to benefit from the GSP+ and raise our exports to Europe, the government will have to reject this demand,” said Prgmea Chief Coordinator Ijaz Khokhar.
“The demand is completely opposed to the free market principle that Aptma claims it stands for,” he contended while talking to Dawn.
He said the small garment exporters had been hit hard by abrupt appreciation of the rupee and imposition of the duty on Indian yarn would only push domestic prices at the cost of the value-added exports. “We have booked our orders for the rest of 2014 at Rs108 a dollar. Now the greenback is being traded below Rs100. The imposition of the duty on Indian yarn will only escalate our costs, rendering most of us uncompetitive. We shall do anything to oppose this move,” he said.
Shahzad said Aptma still stood for free market mechanism in textile trade. “But the Indian move to support its spinning industry has made the playing field uneven for us. We have always competed against India despite huge, hidden subsidies it gives to its industry.
But this move has eroded our comparative edge and will result in losses that could cause closure of many mills. Can our garments industry survive let alone compete in the world if local spinning industry is closed down?,” he wondered.
But Ijaz doesn’t agree. “It is wrong to say that India will be able to flood Pakistan with its yarn if its import is not restricted through imposition of duty. The imposition of duty will only cause domestic yarn prices to shoot up, substantially raising our production cost. What use will be GSP+ concessions if we don’t have value-added textiles to export?,” he asked.
When contacted a ministry official said the stakeholders had been called to the meeting to decide the issue. “Both the spinners and garments manufacturers have strong argument to support their positions and we’ll have to find a solution somewhere in the middle to protect the interests of both.”