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Points for Survival / Revival of the Textile Industry - APTMA

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Mr. Tariq Mehmood, Chairman APTMA forwarded the following points regarding survival/revival of the textile industry for representation to the government in the forthcoming meetings. All Textile companies are requested to kindly review it and give their input please.
1.BANKING ISSUES
A-Repayment of Long Tem Loans:
Financial Institutions (including Leasing Companies, Banks, Islamic Banks, Investment Banks) should be directed to restructure all outstanding Term Loans (including LTF loans) of the Spinning/Weaving Industry. Amount outstanding as on JAN 1st, 2008, should be payable in 10 QUARTERLY installments beginning after a grace period of 2 years.
B-Repayment of Markup up to 30th June-2010:
Markup payable to the banks up to 30th June 2010 to be to be accrued allowing the industry to repay the same to the banks in 10 quarterly installments starting 1st July-2010. This will allow some breathing space to the industry.
C-Interest rate relief to spinning industry on investment already made:
Vide MFD Circular No. 06 of 2007 dated 30th Oct-2007 issued by State Bank of Pakistan, the textile spinning sector was extended 3% interest rate subsidy on Long Term Financing against fixed assets only obtained from Scheduled banks for one year. The State Bank of Pakistan has stopped 2nd part of the six monthly payment of this subsidy since 24-06-2008.
ECC has approved the payment and also extended the interest rate subsidy to the spinning sector for further one year up to December 2009.
It is requested that the payment of concessional rate of markup be immediately made to the industry. State Bank of Pakistan to issue circular to the banks in this respect.
D-Concessional Rate of Financing for Procurement of Raw Material:
Raw cotton constitutes approx 70% of the cost of yarn. The failure of the Ministry of Agriculture over the last eight years to introduce an approved Bt cotton and increase cotton production is the biggest reason for the crisis in the textile sector. The cost of procurement of cotton is likely to increase further this year as the commodity prices reach new pinnacles in the world. It is recommended that a "cotton purchase facilitation" finance not exceeding the rate of refinance of the state bank of Pakistan be allowed to purchase cotton for one year.
E-Zero Rating of Basic Textile Industry:
The textile spinning & weaving industry is currently under severe crisis. It is recommended that the duty draw back scheme for the industry be revised to compensate high cost of doing business due various taxes/levies/duties be zero rated. This will not only revive the ailing spinning and weaving industry but also assist the value added sector to price their products more competitively.
F-Investment under BMR and Expansion:
In order to encourage investment under BMR and expansion spinning machinery electricity generators for captive power be allowed under LTFF scheme of the State Bank of Pakistan.
Woven Garments
The narrow width weaving industry is generally targeted to produce apparel grade fabric. Due to lack of sufficient dyeing and finishing of this type of fabric the garment industry for apparel has not developed. It is proposed that the investment in narrow width dyeing and finishing be supported. in addition, the export of woven garments may be supported.
A cover for exchange fluctuation upto 5% may be made available in case of loans in foreign currency for both short term and long term loans during the period of the loans.
2.ENERGY
A-Currently textile industry is enduring total disconnection of gas supply to textile industry on gas based generation since last 18 days by SNGPL on Cluster based gas load management program. Only textile industry/captive power is being targeted for gas supply disconnection.
Similarly, textile industry is also enduring electricity load shedding from 10 to 16 hours daily by PEPCO.
a)It is submitted that gas supply to the textile industry be restored immediately. And for future gas load management program rotational policy be followed and cluster based policy being textile industry biased be discontinued.
b)100 MMCFD gas supply be obtained from SSGC network and this quantity be made available for running the textile industry.
c)Priority of the textile industry being export oriented and continuous process be followed by SNGPL for gas load management
d)Electricity load shedding b e exempted to the textile industry on independent and grouped feeders with immediate effect.
B-Energy efficiency initiative taken by various organisations be rationalised and expedited on fast track basis to achieve desired objectives.
3.RAW MATERIAL
A-BT Cotton:

Bt. cotton production be introduced on fast track basis by acquiring renowned technology.
India used to be one of the lowest cotton yields country and now has become an exporter of cotton. Benefits of introducing Bt. cotton in India are:

To achieve 20.70 Million bales by 2015 it is proposed to ensure fast track introduction of Bt. cotton.

4.TAXATION
A-Rationalization of Taxes:
a)With holding tax on export to be reduced from 1% to 0.25 % for at least one year.
b)Collection of EDF to be immediately abolished.
c)To encourage investment in textile industry 20% tax credit regime be introduced
B- Sales Tax Refund:
Procedure for sales tax refund needs to be rationalized and the textile sector being an industry and backed by assets worth millions of rupees, be given priority .
5.INCENTIWISE MERGERS AND ACQUISITIONPakistan textile industry appears to have failed to compete in international market because of in-adequate availability of cotton loc ally, high cost of production, shortage of power to run the plants, rising utility cost and cost of other inputs. Therefore, the textile sector is loosing the benefits of economies scale and suffering from inefficiencies.
6.HUMAN RESOURCE DEVELOPMENT
Human resource development programs need to be initiated on a fast track basis. Our women workforce in rural areas needs to be targeted to enter skill training programs.

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