FAISALABAD: Powerloom factory owners and the fabric dealers claim that withdrawal of duty from the cotton had brought about a brief relief for them as yarn rates came down for a couple of days, and now yarn dealers and spinners managed increase in prices through alleged speculation.
Fabric prices should have been increased following the surging prices of yarn, however, the situation remained otherwise.
To highlight the trend of black marketing and speculative buying [of yarn], the powerlooms owners turned up on roads a couple of days ago, requesting the government to look into the issue and act against the ‘black marketeers’ and ensure relief for the weaving sector, but to no avail.
Banners against the [alleged] black marketing and speculative buying were also displayed at different points of the yarn market.
Say duty withdrawal was ‘cold comfort’
Council of Loom Owners Chairman Waheed Khaliq said they had sent a letter to the relevant quarters mentioning the issues being confronted by the weaving segment like increase in cost of production was a main reason for powerloom crisis that hit exports. “Tariff rationalisation and financing surcharges imposed on electricity are unjustified. Such charges are extra financial burden on the already beleaguered industry and must be withdrawn.”
He said no relief of Rs3 per unit of electricity announced by the prime minister was extended to the industry rather it was attached to the fuel price adjustment. He said the relief must be provided to them separately.
Khaliq alleged that the Federal Board of Revenue had been harassing the factory owners by issuing them summons.
He said the government must restore the turnover tax ratio to Rs50 million because the input cost and prices of raw material had surged manifold.
Sensing the ‘fragile’ financial position of the powerloom factory owners, he said the government must expedite income and sales tax refund policy.
Mohammad Akram, a weaving factory owner said, recently the State Minister for Textile Haji Akram Ansari had been requested to ensure zero-rated facility for the powerloom sector. He said more than 200,000 powerlooms had been set up in small units and required immediate attention of the government.
He said the minister had also been requested to decrease the sales tax registration amount from Rs700,000 to Rs400,000.
Riaz Shahid, a fabric dealer, said people at the helm of affairs were well aware that powerlooms had been sold against Rs65 per kilo. “And we were expecting some serious efforts. To our utter surprise nothing was done and only the ‘darling’ -- the spinning sector-- was fed.”
He suggested the government to form a special body for keeping an eye on the yarn and fabric trade as textile industry was the backbone of the economy. He said through this body the trend of black marketing and speculative buying could be arrested permanently.
He claimed that one could check from the record that the weaving segment had been protesting for years against the black marketing, speculative buying and sale of raw material to ‘rival’ countries. However, he said, the ‘powerful’ lobby of the spinning sector easily managed the decision makers, he said.
He said a couple of weeks ago prices of assorted varieties of fabric decreased from Rs1.5 to Rs4 inflicting losses on traders and the factory owners as well. “Yarn dealers can recover their money but weavers have to face permanent losses as fabric prices don’t fluctuate like the yarn.” Zahid, a yarn trader, said decline in prices had inflicted losses on hoarders and traders. “But now prices are stable for a couple of weeks.”
He said: “It has often been observed that powerloom owners refuse to lift yarn bags following surge in prices. In this situation, traders, hoarders or spinners have to suffer.”
“It is a matter of grave concern that four state ministers - textile, finance, water and power and interior belong to Faisalabad, and the industrialists are on roads to get their issues resolved,” he added.
Published in Dawn, January 23rd, 2018