LAHORE: APTMA reiterates that there is no shortage of yarn in the country. In fact, the import of cotton yarn in the first quarter of FY 2020 last year was 1,1047 tons, while it rose to 1,3976 tons in the first quarter of FY 2021, showing an increase of 27%. Similarly Yarn Exports have also reduced significantly while production of Yarn in the country has increased signifying enhanced supply of yarn to further processing and value addition in-country. The import and export data of yarn is attached herewith.
The export-oriented sectors of Pakistan have shown extraordinary growth and exceeded targets, outperforming regional players. In September 2020, there was 11.3% surge in textile exports, leading to the impressive export volume of US$3,469.5 million in July-September (FY2020-21). Prime Minister Imran Khan's efforts to promote export-led economic growth have proved instrumental in this regard.
The apparent "shortage" being touted is based on commercial considerations that have affected the price of yarn world-wide. Exporters have booked orders at an exchange rate of Rs168-170 to a US dollar, while the current exchange rate being Rs161.5, leading to a hike in the costing of prebooked export orders. Similarly, cotton which was trading at US63.8 cents/lb just 3 months ago is currently at US76 cents/lb, increasing the cost of yarns proportionately. Exporters have had to squeeze their margins and are consequently trying to recoup and minimize their losses through reductions in input prices.
The notion that Pakistani Exports will miss "Christmas Orders" due to a "shortage of yarn" is erroneous, as manufacturing and shipping procedures require at least 3-4 months, a timeframe which has long passed. The real issue remains rooted in incorrect export pricing and misplaced expectations on exchange rate.
Duty free import of Yarn for re-export after further processing has always been readily available to registered exporters through DTRE and Bonds. APTMA has and always will support the import and simplification of procedures for Duty Free raw materials or other inputs for export purposes. The argument that reduction in duty would increase supply or reduce cost for exporters is illogical, as exporters are already entitled to Duty Free import of Yarn through DTRE or Bond. -PR
Copyright Business Recorder, 2020