India scraps duty-free yarn import facility to hit Pakistan’s exports
Pakistan Times Business & Commerce Desk

LAHORE: India has practically banned the import of cotton yarn from Pakistan by withdrawing ‘zero-rated import facility’ from its export-oriented textile units consuming Pak-made yarn.

The ban was imposed following emerging competitiveness of Pakistan’s efficient yarn manufacturing sector, which was consuming almost 10 per cent less electricity, what to say about other factors, industry sources said here on Tuesday.

A technical study made available to The News indicated that cost of energy input in India’s spinning sector was the highest amongst the major textile producing countries despite heavily subsidised power supply to their industry.

The phenomenon has made the Indian textile industry uncompetitive in the global market as well as hostile towards the neighbouring industries, forcing New Delhi to impose literally a ban on the entry of Pakistani yarn exporters into zero-rated raw material import regime for its exporting textile units.

Zaheer Ahmad, Chief Engineer Saif Group of Companies, said that the cost of electricity input was the highest in India as it cost $0.33 per kg for conversion of cotton into yarn while in Pakistan it was $0.29 per kg despite the highest ever power tariff in the region.

Similarly, the same input costs $0.18 per kg in South Korea, $0.23 per kg in Indonesia, $0.27 per kg in Turkey and $0.23 per kg in Italy.

He said that Turkey’s spinning industry had literally been wiped out in the wake of rising cost of energy input and now Pakistani yarn exporters might be enhancing their access to the European markets.

Textile industry insiders revealed that India’s spinning sector was the most inefficient part of its textile industry. With more than 38 million spindles, they were consuming 19 million bales. In Pakistan, there were 11 million spindles, which were consuming around 14 million bales.

Basically, India’s half of the spinning sector is catering to its domestic industry and majority of locally made yarn is being consumed by the unorganised sector.

The so-called ‘Textile Protocol’ unleashed by the policy-makers at New Delhi had practically nullified the Indian claim of declaring Pakistan a Most Favoured Nation (MFN) for trade, industry sources said and added that hidden tariff and non-tariff barriers introduced by the Indian government were actually the main hurdle in improving bilateral trade between the neighboring countries.

Sources said that indigenous Indian textile machinery was far more inefficient as compared to spinning sector in Pakistan, and average age of their spindles was almost 250 per cent higher as compared to the average age of spindle working on this side of border. Worrying from this handicap of industry, Indian policy makers have already entered into agreement with German companies to upgrade their industry for improving productivity, sources added.●