KARACHI, Oct 21: Business leaders of various textile sectors on Tuesday made a veiled threat to the government of “closing down factories and rendering a large number of workers unemployed” if no solution was offered to keep their business running, which according to them, is on the verge of closure because of rising prices of cotton and yarn.

A meeting of leaders of textile sectors called by Federation of Pakistan Chambers of Commerce and Industry president Riaz Tata has asked the government to consider reduction of sales tax to 5 per cent in textile business.

A few spinners were present in the meeting in their individual capacity, but the leaders of rich men club — All Pakistan Textile Mills Association (Aptma) — were conspicuous by their absence. Growers were also absent in the meeting. Leaders of readymade garments, towels, ginneries and a few other sectors dominated the proceedings who virtually endorsed a proposal that asked “hardly half a dozen top spinners of the country to sit together and decide that cotton price should not go beyond Rs3,000 per 40 kg”.

Participants of the meeting representing value-added sector of textiles were convinced that these six or seven top spinners could persuade ginners to halt cotton prices at a level if they refuse buying cotton from growers beyond a fixed price.

A committee has been formed, which will meet on Wednesday to finalize a set of recommendations for the government.

A ginner from Mirpurkhas, however, ridiculed this proposal and recalled the days when at the beginning of cotton season every year, the ginners — both Hindus and Muslims — used to take oath on their respective holy books that they would not buy phutti from growers beyond an agreed price. “Every year this oath was breached,” he informed the participants.

Readymade garment exporters wonder as to why yarn is being exported when its domestic prices are higher than those prevailing in the international market. “Has it something to do with rebate or export refinance?” a garment exporter asked but failed to get any answer from the participants.

While a few participants strongly advocated financial relief from the government, there were a few others in the same meeting who pointed out with equal emphasis that the government will simply not accept any such proposal that would involve financial assistance.

FPCCI president Riaz Tata in his final remarks, however, summed up all the proposals and made it clear that the government should “facilitate textile value-added exporters”. He made a specific reference to those exporters who have booked orders on the cotton and yarn prices that prevailed before the current crisis but now find it hard to deliver the products after prices have escalated beyond all expectations.

Then there was a proposal of importing cotton from India where reigning prices are Rs2,700 and Rs2,800 a maund and involve minimum freight charges. “Cotton is not on the importable items list from India,” Riaz Tata informed the participants.

“Why would India offer its cotton at Rs2,800 a maund to Pakistan when prices here are Rs3,400 a maund and Pakistan happens to be a tough competitor of Indian textiles,” Arshad Alam, FPCCI vice-president, remarked. He recalled a meeting of Pakistani businessmen with a former Indian finance minister a few years ago. The Indian finance minister made a generous offer of sugar from his country to Pakistan but refuse to provide any cotton because “you are our tough competitor”.

There was a demand of “some type of compensation” from the government and textile exporters have asked for restoration of previous rebate rates for “at least next six months” to tackle the situation. The exporters also want a review of cotton refinance being given to them.