The Government has issued an amended office memorandum in which it has changed the words of "up to 32 counts" and inserted the paragraph saying that "export of cotton yarn would be capped at a monthly volume of 50 million kgs during the current crop season and export contracts will be registered by the TDAP on first come first serve basis. This measure would stand terminated on June 30, 2010".
Chairman Khurram Mukhtar and Vice Chairman Sohail Pasha Pakistan Textile Exporters Association said, during the first half of the current fiscal year the national exports have already dwindled by 3 percent compared with the same period of previous year.
Elaborating they said that latest statistics reveal that the export of cotton cloth have decreased 27.48 percent, of Bed wear 6.12 percent, Knitwear 6.49 percent and Towels 5.2 percent from July to December 2009 indicating across the board decline in exports of value added sector as our rival exporting countries were capturing our markets rendering our export items in competitive after cheap buying of our basic raw material Cotton Yarn.
Pointing out the facts behind this phenomenon, they said raw material of our exportable goods have become costly. Prices of cotton yarn have gone up by 30 percent and of polyester fiber by 15 percent. While the cost of inputs have also increased substantially jacking up over cost of production enormously and making our export prices unacceptable to our buyers.
He said, The ministry had clearly mentioned in its earlier circular issued on January 8, 2010, that export of cotton yarn "up to 32 counts" would be capped at a monthly volume of 50 million kgs during the current season and export contracts be registered by the TDAP on first come first serve basis.
The Ministry of Commerce had been requested in the circular to urgently issue the necessary SRO for execution of the above decision. It is also demanded that strict monitoring method may be devised jointly by TDAP and the Customs to ensure that exports are allowed only against contracts duly registered with the TDAP.
The stakeholders said that both the circulars issued by the Ministry of Textile Industry are confusing and clearly open the back doors to the yarn exporters to continue their shipments without break. Pakistan is in dire need of enhancing exports to provide some cushion to its sagging economy.
However, due to these factors, exports are suffering right from the beginning of current financial year, they said. Firstly, the ministry has issued circular free from the five categories of yarn from the volume restriction leaving the space for the yarn exporter to make shipment in garb of any of the category mentioned in the list of exempted yarns. Secondly, revised circular has further opened the doors on to the cotton yarn exporters as the words "up to 32 counts" have been raised.
The value-added textile sector has harshly reacted over ministry's both the circulars as they meant nothing but to allow the spinners sector, the most powerful sector in the trade to continue with the export of cotton up to 32 counts especially coarse yarn (20 single).
The value-added sector has claimed that the yarn crisis has been knowingly created by the spinners in order to create price spiral at home to mint money from the value-added sector. They said that the spinners are exporting cotton yarn to China at the rate of $1.91 per pound, the price, which is less than the previous year.
The stakeholders in order to prove their claim cited the example of export price of last year when spinners exported yarn at $2.20 per pound and even year before last year they sold cotton yarn at the price of over $2 per pound. "This is so surprising that the spinners continued to export cotton yarn at price of below $2 per pound despite soaring prices internationally," said Chairman Khurram Mukhtar and Vice Chairman Sohail Pasha Pakistan Textile Exporters Association.
He said this was done by the spinners to create shortage locally and mint money after increased prices. Member of Implementation Committee on Textile Policy, Rafiq Habib Godil said that it seems that value-added sector is a boat without captain.