LAHORE, Jan 23: The All-Pakistan Textile Mills Association (Aptma) on Tuesday voiced its “disappointment and concern” over what it dubbed as the government’s “negative attitude” toward the spinning industry, but shot down a proposal to shut down mills for two days in protest at official inaction to address issues confronting the yarn producers and exporters.
At an extraordinary general meeting (EOGM) of the Aptma, requisitioned to mount pressure on the government, to give relief package to the spinning industry, the spinners made a scathing criticism of the government, saying it was solely responsible for increasing their cost of production sharply and abruptly.
“This strident rise in the costs can neither be absorbed, nor can be blamed on the doings of the industry,” Aptma chairman Shafqat Elahi told reporters after the EOGM.
Besides rejecting the suggestion to observe a token strike, some members attending the EOGM also turned down another proposal to approach the government to place a moratorium on the expansion and setting up of new spinning mills provided it extended debt-swap facility under the LTF-EOP scheme to the existing mills.
The meeting, however, decided to launch an aggressive media campaign in order to inform all relevant quarters that large-scale closure of the mills was unavoidable, which would result in unemployment and public dissatisfaction if issues were not addressed. Besides, resultant default on loan payments would also push banks in crisis.
“The sharp rise in interest rates in the absence of viable instruments to fix long-term rates, the government’s inaction to counter huge subsidies and financial incentives for textile manufacturers in the other regional countries, like China and India, the cross subsidies in the power and gas sector at the expense of industrial concerns and unprecedented rise in gas price, and the official refusal to allow import of Indian cotton via Wagha were responsible for the hike in the production costs of the spinners,” Mr Elahi said.
In addition to these factors, he also listed the incidence of indirect taxes and levies, like turnover tax, EOBI, EDF, etc., that formed three per cent of their sales and export tax on polyester-based products as major causes for the increasing cost of production of the spinning industry.
“The government needs to address all these issues that have pushed the production costs up sharply,” he demanded.
“Otherwise, exports will decline and our market share will shrink. The growth of economy will slow down and downstream industry will have exceedingly bad effects.”
He said the consequences of the industrial downturn in the spinning sector would be lasting on the economy of the country.
“This type of setback takes only weeks to occur, but it takes years to recover from it,” he said.
“Market share once lost to subsidised textiles from the competing regional economies will not be easily recovered,” he added.
The meeting also decided to seek audience with the prime minister and the president as the “rest of the government has failed to respond to the plight of the industry. In case, an immediate meeting with the president is not possible, a detailed representation, seeking his direct intervention must be made immediately.”
Answering a question, Mr Elahi sought to clarify that the spinning sector had not got any government support or subsidies or relief package at all in the last seven years.
“All the relief measures, announced by the government, like R&D and debt-swap facility under the LTF-EOP scheme, is meant for the downstream value-added industry and does not include spinning or weaving,” he said.“It is despite the fact that spinning is the most vital link in the entire textile chain and has been equally affected by the increasing costs and subsidies given to the textile manufacturers in the regional countries.”
He said the spinners were of the view that they should also get relief in the form of the debt-swap facility, suspension of indirect taxes and levies, opening of Wagha for import of Indian cotton and reduction in gas and power tariffs as demanded by the rest of the textile industry. He said the spinners were forced to demand that the government should provide them a level-playing field to compete in the international market because the “terms of trade” had changed owing to higher production costs and subsidies given by the regional competitors to their industry.