Textile sector seeks duty-free yarn import

Exporters reluctant to finalise export orders due to cotton yarn shortage


Usman Hanif October 12, 2021

KARACHI:

Value-added garment and home textile exporters have urged the government to abolish customs and regulatory duties on the import of cotton yarn as they are facing shortage of this vital input.

“The government must allow import of cotton yarn from across the world as it is a major raw material of value-added textile export industry,” Pakistan Hosiery Manufacturers and Exporters Association Central Chairman Shahzad Azam Khan said, adding that the available cotton yarn was of substandard quality.

Exporters were reluctant to finalise export orders due to the prevailing cotton yarn crisis, he said. “In this scenario, such export orders will be diverted to other regional countries.”

Despite a huge demand for cotton yarn in the local value-added industry, yarn manufacturers and spinners were seen exporting the raw material to regional countries.

“Yarn manufacturers are depriving the value-added textile sector of the main input and in the meantime passing the subsidy benefit, given by the government, on to regional competitors,” he alleged.

In comments to The Express Tribune, Topline Securities analyst Saad Ziker termed these claims a true picture of the current situation in the industry.

“There is a massive need for cotton in the industry,” he said, adding that the value-added textile sector wanted to fulfill maximum export orders but they could not due to cotton shortage.

He underlined that their demand for cotton import from around the world was drawing a lot of criticism in the market, as textile was the largest contributor to overall exports from the country.

Other regional countries such as India and Bangladesh were also recovering from the Covid-19 pandemic and trying to capture their lost share in orders.

“The government needs to pay attention to their demands and address their queries as soon as possible, which will ultimately help Pakistan in the long run,” he added.

AHL analyst Arsalan Hanif was of the view that textile manufacturers’ demand to eliminate customs and regulatory duties and allow import of cotton yarn would not only resolve supply-side issues but would also reduce cotton prices in the local market.

However, this could have negative repercussions, as farmers would feel insecure and demotivated if they did not receive the expected price, he added.

While exporters were demanding duty-free cotton yarn imports, some sources said it was unnecessary and would burden the country.

“There is no shortage of cotton yarn in the country,” said an industry source requesting anonymity.

“If you compare cotton yarn production with its exports, you will realise that only 11% of the cotton yarn produced has been exported,” he said, adding that the issue was with the rising cotton cost around the globe.

“How exports of value-added textile products increased, if there was a shortage of cotton yarn,” he asked.

Published in The Express Tribune, October 12th, 2021.

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