Saving textile industry: senate panel for reversing all budgetary measures

The negative impact of budgetary measures for industry has been estimated at Rs 1 million per month for an average spinning mill, says a recommendatory report presented by senators to the National Assembly for incorporating it in the Finance Bill 2007-08.
The report of Senate standing committee on finance, revenue and economic affairs has been compiled by 11 senators representing both opposition and government sides in the Upper House.
According to the report, available with the Business Recorder, the negative measures for industry, which were taken in the current budget, include one percent surcharge on imports; salary increase by Rs 600; 5 percent CED on all no fund-based bank charges; general sales tax on utility bills of residential colonies; 5 percent increase in GST on informal steel manufacturers and cost of appointment of independent share registrar.
However, the report has also mentioned the positive measures taken for the industry in the current budget whose impact is also calculated to be over Rs 400,000 per month for an average textile-spinning mill.
The committee opined that the conclusion of the above measures and summary of the impact was that the budgetary proposals were going to end up making the cost of production of the industry in general and textile spinning industry in particular much more than before the budget.
It is clear that in case these negative measures are not corrected the industrial crisis would worsen, the committee expressed fears. The Senate committee has recommended that the negative measures listed therein either reversed or compensated to the industry to at least restore them to the position they were in before the budget.
The committee put forward following recommendations to the National Assembly for what it called 'survival of the industry'.
a. Refinance facility be allowed on yarn also with rates brought down to 7.5 percent level.
b. Utility rates for textile and in particular spinning industry be reduced by 25 percent. Cross subsidy of gas rates be removed as already approved.
c. Duty drawback should be 6.5 percent PC yarn as duty charged on polyester staple fibre is 6.5 percent. Eighty percent of all textile production is exported in one form or the other so it is against the basic principles to impose duty on what is going to be exported anyhow.
d. All taxes, federal and provincial should be zero-rated for the industry.
e. Moratorium for three years on instalments falling due with no penal action is a must in view of the exceedingly difficult position of the industry caused by increases in costs of production. If it is not done, there will be spiralling defaults.
f. The industry's demand for a practical bankruptcy law is a legitimate one. The desperation and despondency of industry in general and the textile spinning industrialists in particular, can now be gauged from the fact that they are raising as point No 1 on their agenda asking the government that if they could not do anything then at least give them an honourable exit strategy so that they could call it a day and resign to the fact that their personal capital is going along with years of hard work but at least they should not continue to be hounded as criminals for being in fault for setting up an industry.
g. Personal guarantee should be invoked in cases of limited companies or in fact be required in the case of limited companies and in particular public listed companies.
h. Procedure must be removed from the normal banking loans recovery provisions.