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Spinning industry demands lift of duty, quota on yarn
03
Jul '10
Spinning industry owners met the government last week to ensure that, quota and duty imposed on yarn exports is lifted by July 26. But the value-added textile sector wants the government to continue with the duty imposition on yarn, for another year.

Crisis surrounding yarn has not yet been solved, despite several policy measures taken up by the Textile Ministry, to ensure yarn is available at reduced rates.

Now, while the value-added textile segment complains about dearth in yarn clubbed with increased yarn prices, spinning industry owners are blaming the government of fraudulently playing with the open market economy and denying the spinners opportunities for export, via imposition of restrictions and duties on exports of yarn.

During a meeting of the value-added segment with the Prime Minister, Yousuf Raza Gilani and Textile Minister, Rana Farooq, they demanded that, the government continues with the imposition of duty on yarn.

In addition, they have also demanded for a three years freeze on about Rs 300 billion debt of the value-added segment and a bailout package, just like the defunct industries received during the late 90s.

But, the certain associations did meet the Finance Minister to get an assurance that, the temporary restrictions and duties on exports of yarn, which expire on July 26, are not given an extension. But they did not receive any, as he refrained from giving any promises.

Deliveries made in the month of June are at a much lower rate than the rates at which yarn is currently being supplied to the local industry. This is because, exports of yarn carried out in the last week of June, were made due to the Letters of Credits (LCs), which were opened prior to May 13, as shipments post it were held back for over a month by the government.

The current export price of yarn in the international market stands at Rs 127 a pound as compared to Rs 115 a pound, which was practiced in the domestic market.

As per a spinner and knitwear exporter, the apparel segment was under tremendous stress over the last nine months, owing to contracts, which were inked at reduced prices. But the new deals are being inked at 20 percent higher prices. Moreover, with the current rate of cotton at Rs 6,700 a maund, the cost of producing yarn has also surged to Rs 120 a pound.

As of now, spinning industry owners are supplying yarn to the domestic industry at a rate of Rs 110-115 per pound, which has lead them to register a daily loss of Rs 300,000 – 500,000, in anticipation that things might change post July 26.

Fibre2Fashion News Desk - India


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