The Chairman of All Pakistan Textile Association (Apta), Adil Mehmood, has said that the textile industry has lost hope for government's survival package for its member units and is presently in a state of despondency which could wind up textile and spinning in Pakistan.
He told Business Recorder on Tuesday that almost all spinning units were either running in loss, creating bank defaults, or working on single shift basis to mitigate the cash loss. He suggested that the government should defer long-term long loans for two years and allow repayment thereof in next five years, or loans principal should be converted into equity of the company with buyback agreement.
He said the mark-up rate on loans should be reduced to 7 percent per annum and rationalisation of energy tariff should be implemented, followed by an exit strategy through bankruptcy law. He suggested that the textile industry should be exempted from the 6 percent Employees Social Security Institution (ESSI), and 7 percent Employees Old Age Benefits Institution (EOBI), and turnover tax, professional tax, property tax to save the spinning sector.
He warned that the increased federal excise duty on banking and insurance to 10 percent, advance income tax on import to 2 percent, tax on cash withdrawal increased to 0.3 percent and general sales tax increased to 16 percent would adversely affect businesses.
He said that research and development was available to downstream sectors and textile industry chains. "The above R & D [research and development] facility has been abolished and this will have adverse effect on the whole textile sector," he said.
He praised steps taken by the government to abolish power cuts, enabling the spinning mills to operate regularly but said that the spiralling electric and gas rates had tremendously increased the cost of production. He also praised certain relief given in the budget, such as turnover tax had been removed, duty on PTA and PSF has been reduced by 2 percent. He then appealed to the government to take steps to save the spinning mills - the largest source of providing employment to workers.