KARACHI, Jan 17: A large number of hosiery units have been closed down rendering over 0.4 million skilled and unskilled workers jobless. As a result of this over 250,000 stitching machines and around 5000 to 6000 knitting machines have also become idle.

The high cost of cotton and cotton yarn in the domestic market since the start of new cotton season from September 1, 2003 is being blamed for the sudden closure of a large number of value-added textile industry.

"The government is indifferent towards the issue and totally insensitive to much of issues that are crippling the labour-intensive and foreign exchange earning industry," lamented vice chairman Pakistan Hosiery Manufacturers Association (PHMA) Akhtar Yunus.

Since the beginning of new cotton season, the value-added textile industry had been asking the government to impose ban on export of cotton and cotton yarn but till today no action has been taken to protect the domestic industry, maintained Akhtar Yunus.

He said that the textile ancillary industry also suggested to impose 10 per cent export duty on cotton yarn so that prices in the domestic market could be brought down to meet the value-added textile industry's costing to keep its products competitive in the world market but this also landed on deaf ears.

Akhtar Yunus said that unbridled export of cotton yarn at lower than world prices only strengthened the competitors in the world market and have almost ruined the value added textile sector which is presently the highest foreign exchange earner.

The case fact is, he said, that one kilogramme of export of yarn brings $2.13 whereas one kg of export of garment (value- addition) fetches $7 but even then the policy makers are not ready to adopt pragmatic policy with the changed conditions suiting best to the national interest.

Presently, out of $7 billion textile exports, four major value added textile products - bedlinen, hosiery, readymade garments and fabrics - are fetching over $1 billionin foreign exchange whereas cotton yarn exports are stagnant at around $1 billion for the last couple of years.

He said that a few years back cotton was being exported to beef up thin foreign exchange reserves of the country and similarly export of cotton yarn was encouraged to earn hard cash. However, over $12 billion reserves give enough strength and reason to impose total ban on export of cotton and cotton yarn and concentrate on export of value-added textile products.

The PHMA vice chairman said that China, which is importing Pakistan's cotton and cotton yarn, gives subsidies in terms of exchange rate and rebates to the tune of 20 to 30 per cent and can absorb the unprecedented price hike.

On the other hand, he said the Pakistan value-added textile industry has to pay a number of direct and indirect taxes and huge amounts of exporters are stuck up in the form of sales tax refund. Therefore, it has become impossible for the value-added textile industry to compete with China due to high rates of cotton and cotton yarn in our country.

The value-added textile industry books export orders on seasonal basis and are almost six months in advance. The sudden hike in raw material, which constitutes a major part of a product cripples the costing settled with foreign buyers and there remains no way out except to suffer colossal losses which in many cases results in closures of many industrial units.

Responding to a question, he said, PHMA cannot exactly give the number of closed units because mostly there is cut in shifts which indirectly means lay-offs and large number of idle machinery.