LAHORE, June 12: The imposition of one per cent surcharge on all imports, including raw cotton and textile machinery spares, will increase the price of local silver fibre putting additional burden on textile sector, spinners and apparel exporters said.

Faced with a record trade deficit, the government imposed in the new budget one percent surcharge on all imports, excluding vegetables, pulses, edible oil, petroleum products, medicines and fertilisers.

“The new levy on import of our raw material will push the price of local cotton as well because its rates are based on its import parity price. Similarly, it’ll also make import of machinery spare parts expensive. The increased cost of cotton alone will rob the industry of billions of rupees adding to its losses,” All Pakistan Textile Manufacturers (Aptma) Chairman Shafqat Elahi told Dawn on Tuesday.

The 33 per cent increase in the minimum wages of labour to Rs4,600 per month is yet another step that is pinching the industry.

He said the Aptma managing committee will meet on Wednesday to thoroughly examine the budget with reference to the measures affecting textile industry and analyse their impact on its competitiveness.

The textile industry has been clamouring for substantial government support for the last two years to cope with the all round increase in cost of doing business.

The domestic support given by India and China in the form of substantial subsidies to their textile exporters and preferential, duty-free treatment allowed by the US and the EU to the textile imports from countries like Bangladesh is also edging Pakistani textiles out of the world markets.

He said that although the government had announced a few actions like extension of facility of swapping loans obtained after 2003 to the spinning sector, inclusion of polyester staple fibre in the DTRE scheme, and provision of subsidised credit to spinners, the industry feels it has got too little too late.

“Instead of giving us anything, the government has actually put further burden on the industry by levying special surcharge and raising minimum wages,” commented a leading yarn producer from Lahore.

Though Shafqat Elahi appreciated the extension of loan swapping facility to the yarn producers, others rejected it saying it will benefit only a few. “The facility will cover only 20-25 units,” said Adil Mahmood.

He said the 3 per cent reduction in cost of long-term credit is not enough. “We have been asking for reduction in interest rates for the textile industry on both long and short-term credit,” he said.

Pakistan Readymade Garments Manufacturers and Exporters Association (Prgmea) Chairman Ijaz Khokhar is not happy with the budget because the government has halved the R&D rebate being given to the value-added apparel to 3 per cent from the existing 6 per cent.

The increase in minimum wages will put additional burden on the industry, which will be forced to cut jobs to stay afloat, he said.