LAHORE, Pakistan — The All Pakistan Textile Mills Association went on a two-day strike Tuesday to protest the imposition on May 13 of a 15 percent export tariff on locally produced yarn for 60 days.
The government stressed the duty was helping improve the availability and cool the price of yarn in the domestic market for the benefit of knitting mills. Yarn and products of blended yarn that have been imported is exempt from this duty.
Yarn mills asked to go on an indefinite strike, but the association, which also includes apparel and home textile mills — that would directly suffer as a result of the strike — persuaded them against it. Last week, there were also street marches in Faisalabad and Karachi by yarn mill workers who will be out of a job if yarn mills cease operations.
With less than 90 days left until the new cotton crop comes in, and with India banning its cotton exports on April 19, Pakistani yarn mills are left scrambling to fulfill orders. Yarn mills had been doing a robust business exporting yarn to Chinese mills after China had a shortfall in cotton production last year. This created shortages in the domestic yarn market and caused the price of yarn to double in a year.
The knit apparel sector had been suffering from competition from other Asian nations and raw material price fluctuations, said Ejaz Gohar, chairman APTMA (Punjab zone) and managing director of Ejaz Spinning Mills in Lahore. That led to taxing yarn mills $190 million in the last two months. As a result, some yarn mills are mulling over shutting operations after three mills closed on May 15.
“All the yarn orders will now be diverted to India, with 50,000 tons of yarn surplus in Pakistan,” said Ejaz. “Pakistani yarn was 5 percent cheaper than India and now it will be 10 percent more expensive. How many of those accounts will come back? At least, India should honor existing contracts for 200,000 bales of cotton for which letters of credit have already been issued by Pakistani yarn mills.”