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MARKET WATCH 09 JULY, 2019

NATIONAL

INTERNATIONAL

 

Budget 2019: Surat textile industry not happy with decision on excise duty, fuel cess

Budget 2019 India: Textile industry in Surat had pitched strongly for removal of reverse charge mechanism (RCM), but it would remain the same as the finance minister didn’t even touch on the subject, said Devkishan Mangani, chairman, textile committee, South Gujarat Chamber of Commerce and Industry (SGCCI). Budget 2019, budget, startups,budget highlights, budget 2019 date, budget 2019 PDF, budget 2019 highlights, budget 2019 income tax, budget highlights 2019 indiaBudget 2019-20: At present, the limit is just `50 lakh, which remained unchanged in the Budget. Union Budget 2019 India: The Centre’s budgetary announcement of raising excise duty as well as road & infrastructure cess on petrol and diesel has not gone down well with those associated with Surat’s Rs 80,000 crore textile industry which directly and indirectly employs over 15 lakh people. “Surprisingly, there was hardly any mention in Budget speech about textile industry, which gives largest employment after agriculture in the country,” said Manoj Agarwal, president of Federation of Surat Textile Traders Association (FOSTTA). “With over 50% market share, Surat is the hub of man-made fabric (polyester) in the country. Raw material for the polyester fabric is also petroleum product and it would become costlier. Moreover, transportation cost at every stage right from bring raw material, sending grey fabric to process houses and sending finished goods in market would also become dearer as already petrol and diesel prices have gone up by Rs 2.50 per litre,” he added. Already, textile industry in the country, including that in Surat, is experiencing rough time and hence FOSTTA had demanded dedicated ‘Garment Hub’ near Surat ahead of union Budget. Now, increase in cess on petroleum product has put additional burden on all those associated with man-made fabric manufacturing ecosystem. There are seven lakh power looms in Surat out of which nearly six lakhs are operational as around lakh are in the process of modernisation, said Agarwal. Of around 400 process houses, 80 have been shut down due to recession, he added. Not only hike in petroleum, the industry is dejected over no change in GST provisions and limit on cash transaction. Textile industry in Surat had pitched strongly for removal of reverse charge mechanism (RCM), but it would remain the same as the finance minister didn’t even touch on the subject, said Devkishan Mangani, chairman, textile committee, South Gujarat Chamber of Commerce and Industry (SGCCI). Income Tax Calculator: Know post-Budget 2019 Income Tax out go here. According to Mangani, due to RCM, money circulation cycle has become prolonged and hence they are facing acute shortage of finance. He further said that in textile value chain at various stages, businessmen are required to do cash transaction, but due to limit of Rs 10,000 per day, many in fabric manufacturing process are facing difficulties. “We have demanded increase in the limit up to at least Rs 25,000 per day. However, it was also not considered,” he added. The annual turnover of the textile industry in Surat is pegged at around Rs 80,000 crore. After demonetisation and implementation of GST, production of fabric has gone down from 4 crore meter per day to 2.5 to 3 crore meter per day. The textile industry was also pitching for the removal of GST for those units whose turnover is below Rs 5 crore. At present, the limit is just Rs 50 lakh, which remained unchanged in the Budget.

Source: Financial Express

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Breather for exporters as Centre to pay ITC refund for State GST

New Delhi: In a major relief to exporters, the Centre will now pay the input tax credit (ITC) refunds of state taxes, thereby reducing transaction time and costs, and manual interface in claim processing. As per industry, there is a huge difference in the amount claimed, state goods and services tax (SGST) sanction amount received from central tax authority and the amount actually disbursed. “The central government has been authorised to pay the amount of refund towards state taxes to the taxpayers,” according to the 2019-20 budget. At present, the taxpayers file refund claims with the central tax officer, who clears half the claims, and the rest are cleared by the state tax authorities, leading to higher time taken in claim processing and refund sanctioning. Exporters also say that ITC refund is partly electronic and partly manual. The exporter files refund application at the portal, takes a printout along with acknowledgement and carries it to GST authorities in hard copy along with required documents, which too vary from authorities to authorities. The physical interface adds to the transaction time and cost. “The states and Centre did their own respective approval of ITC refund but now only one will approve both. This is a relief for exporters as it would reduce transaction time and costs,” said Ajay Sahai, director general at Federation of Indian Export Organisations. The breather comes as exporters grapple with tight credit norms amid slowing global trade growth. Total disbursement of export credit was Rs 7.38 lakh crore in December 2018, a decline of 20% on year. Share of PSU banks in total disbursement of export credit declined from 65% in FY16 to 45% in FY18. Exporters have said the number of refund applications filed on the portal are higher than those received in the state tax office. “The ability for Centre to give the refund for both the CGST and SGST will ease the problems being faced currently specially by the exporters and remove the delay in getting the entire cash post the sanction of refunds,” said Bipin Sapra, partner at EY.

Source: Economic Times

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Rupee drops 24 paise to 68.66 against U.S. dollar amid equity meltdown

The rupee on July 8 declined by 24 paise to close at 68.66 against the U.S. dollar, cutting short its three winning run due to a massive selloff in equities and weakening expectations of a rate cut by the U.S. Federal Reserve in near future. Foreign institutional investors pulled out ₹401.99 crore on July 8, hitting the rupee sentiment. Emerging market currencies took a hit after the U.S. job data fuelled expectations that the Federal Reserve will not cut interest rates quickly in near future. The U.S. dollar traded strong against its rivals, and Asian currencies. Investors sentiment was subdued on concerns that increased surcharge on super-rich could affect foreign funds investing in India, which could lead to flight of foreign funds from the domestic markets, currency traders said. The rupee opened lower at 68.49 from the last close of 68.42 at the inter-bank foreign exchange (Forex) market. The local unit lost further ground to touch a session low of 68.76 before closing at 68.66, marking a fall of 24 paise over its previous close. The rupee on on July 5 settled 8 paise higher at 68.42 against the dollar. “Rupee follows the path of emerging-market currencies, as markets start to rethink the extent and speed of rate cuts by the Federal Reserve. Regional stocks also traded weaker as budget Blues continue,” V.K. Sharma, Head PCG & Capital Markets Strategy, HDFC Securities, said. The 30-share Sensex tanked 907 points in the intra-day trade before settling at 38,720.57 points, showing a sharp loss of 792.82 points or 2.01%. The broader Nifty of the NSE tanked 252.55 points, or 2.14%, to close at 11,558.60 points. The 10-year government bond yield was at 6.60%. “bond market traded higher amid lower than estimated fiscal deficit number and proposal of foreign currency bond issuance. Finance Secretary Subhash Chandra Garg said that government is targeting the second half of the fiscal year to raise funds through overseas bond sales,” Mr. Sharma said. Brent crude futures, the global oil benchmark, slipped 0.16% to $64.33 per barrel.

Source: The Hindu

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RIL ties up with Turkey's textile manufacturer Kivanc Tekstil to manufacture and market eco-friendly fabric

New Delhi: Reliance Industries Ltd (RIL) on Monday said it has tied up with Turkish textile manufacturer Kivanç Tekstil to manufacture and market its sustainable and eco-friendly fabric brand R|Elan's GreenGold fabric in Turkey. "Apart from manufacturing and marketing R|Elan GreenGold fabrics, Kivanç will be the exclusive distributor of Recron GreenGold fibres to spinners, yarn manufacturers and knitters across Turkey. The arrangement will enable RIL and Kivanç to offer the best quality eco-friendly textile solutions to brands and retailers, sourcing their requirements from Turkey, to meet the ever-growing demand of environment-friendly apparels," the company said in a statement. The manufacturing excellence of Kivanç would be further enhanced by the high-quality GreenGold fibres as well as by the support of RIL's efficient technical team. Kivanç Tekstil caters to major European and American fashion brands and retailers. Vertically integrated across spinning, weaving, dyeing, printing and finishing, Kivanç produces 18 million metres of blended fabrics per annum. Its yield comprises a wide range of blends straddling polyester, cotton, viscose, linen, tencel, modal and wool. RIL ties up with Turkeys textile manufacturer Kivanc Tekstil to manufacture and market eco-friendly fabric. Speaking about the partnership, Ziya Kivanç, CEO, Kivanç Textil said, "At Kivanç our mission is to be a company that focusses on customer satisfaction, striving to be trustworthy, reliable and sensitive to human health and environmental issues, while producing the best quality fabric brand"."We at Kivanç, do business by providing utmost importance to the environment and well-being of the people".The partnership with RIL, he said, is a significant initiative in accomplishing the mission. "The exclusive distributorship of Recron GreenGold fibres and yarns and being a manufacturer of R|Elan GreenGold fabrics will provide us with immense growth opportunities. Henceforth, most of the polyester blended fabrics will be made out of sustainable fibres at Kivanç!," he added. RIL, the owner of brand R|Elan, is one of the largest recyclers of PET bottles in India, recycling 2.2 billion PET bottles a year. R|Elan GreenGold, made from recycled PET, substantially reduces the emission of greenhouse gases. The fabric is made from pre-dyed fibres, its manufacture doesn't need much water. Whatever little water is used, 90 percent of it is recycled. It uses bio-fuels and is one of the few recycled brands that provides end-to-end traceability throughout the supply chain, right from PET bottles to fibres. RIL has partnered with key players across global textile hubs to produce new-age fabrics, using its speciality products. This strong global network, called the Hub Excellence Program (HEP), provides assurance to brands/ retailers of streamlined production, timely supply of raw materials, and standard quality. The partner firms also receive technical and product development assistance from RIL, as well as leads for business development.

Source: First post

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Global Textile Raw Material Price 08-07-2019

Item

Price

Unit

Fluctuation

Date

PSF

1247.34

USD/Ton

-1.55%

7/8/2019

VSF

1728.88

USD/Ton

0.59%

7/8/2019

ASF

2257.55

USD/Ton

0%

7/8/2019

Polyester    POY

1254.60

USD/Ton

-2.54%

7/8/2019

Nylon    FDY

2407.66

USD/Ton

0%

7/8/2019

40D    Spandex

4293.18

USD/Ton

0%

7/8/2019

Nylon    POY

5482.51

USD/Ton

0%

7/8/2019

Acrylic    Top 3D

1457.65

USD/Ton

-1.95%

7/8/2019

Polyester    FDY

2291.63

USD/Ton

0.64%

7/8/2019

Nylon    DTY

2407.66

USD/Ton

5.73%

7/8/2019

Viscose    Long Filament

1392.38

USD/Ton

-2.04%

7/8/2019

Polyester    DTY

2646.98

USD/Ton

0.55%

7/8/2019

30S    Spun Rayon Yarn

2414.92

USD/Ton

0.30%

7/8/2019

32S    Polyester Yarn

1958.04

USD/Ton

0%

7/8/2019

45S    T/C Yarn

2625.22

USD/Ton

0%

7/8/2019

40S    Rayon Yarn

2683.24

USD/Ton

0%

7/8/2019

T/R    Yarn 65/35 32S

2255.37

USD/Ton

0%

7/8/2019

45S    Polyester Yarn

2103.08

USD/Ton

-0.68%

7/8/2019

T/C    Yarn 65/35 32S

2393.16

USD/Ton

0%

7/8/2019

10S    Denim Fabric

1.33

USD/Meter

0%

7/8/2019

32S    Twill Fabric

0.76

USD/Meter

0%

7/8/2019

40S    Combed Poplin

1.03

USD/Meter

0%

7/8/2019

30S    Rayon Fabric

0.62

USD/Meter

0%

7/8/2019

45S    T/C Fabric

0.68

USD/Meter

0%

7/8/2019

Source: Global Textiles

Note: The above prices are Chinese Price (1 CNY = 0.14504USD dtd. 8/07/2019). The prices given above are as quoted from Global Textiles.com.  SRTEPC is not responsible for the correctness of the same.

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EU-Mercosur trade deal opens new opportunities

The European Union and Mercosur states – Argentina, Brazil Paraguay and Uruguay, have reached a conclusion of negotiations for a comprehensive and ambitious Free Trade Agreement at the end of last month. Euratex, the European Apparel and Textile Confederation, said it welcomes the agreement. The organisation has been actively engaged in the negotiation process to ensure an agreement fit for textile and clothing companies, also preserving social and environmental standards in the manufacturing of high-quality products. “Despite a challenging trade environment, we are glad rules-based trade has prevailed,” said Alberto Paccanelli, Euratex President. The EU-Mercosur FTA is the largest trade agreement ever concluded by the European Union, covering a population of 780 million. According to the EU, this agreement will save European companies over EUR 4 billion in duties. For the textiles and clothing industry, in particular, tariffs have been very high, reaching 35% in Brazil. “In 2018 EU exports of textile and clothing products to Mercosur were 460 million euros and the elimination of tariffs will open further business opportunities for our sector,” added Mr Paccanelli. “We look forward to a swift approval by the European Council and the European Parliament.” The EU is the biggest foreign investor in Mercosur with a stock of EUR 381 billion, while Mercosur’s investment stock in the EU amounts to EUR 52 billion in 2017. While the relationship is very substantial, both exporters and potential investors face barriers in Mercosur markets. One of the main goals of the new EU-Mercosur trade deal is to remove these barriers and help EU firms – especially smaller ones – to export more. The voice of the European textiles and clothing industry, Euratex works to achieve a favourable environment within the EU for design, development, manufacture and marketing of textile and clothing products. The EU textile and clothing industry, with around 171,000 companies employing 1.7 million workers, is an essential pillar of the local economy across many EU regions. With over EUR 50 billion of exports, the industry is a global player successfully commercialising high added value products on growing markets around the world.  Working together with EU institutions and other European and international stakeholders, Euratex focuses on clear priorities: an ambitious industrial policy, effective research, innovation and skills development, free and fair trade, and sustainable supply chains.

Source: Innovation in Textiles

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Trump's trade war is turning out to be a boon for Bangladesh

For the first time in 30 years, Newage Group, a Bangladesh-based garment manufacturer, is sensing an opportunity to sell in the U.S. And it has President Donald Trump’s battle with China to thank. Newage, a supplier to Hennes & Mauritz AB, has been doing business with European companies for three decades but is now getting inquiries from Macy’s Inc. and Gap Inc., Asif Ibrahim, vice-chairman of Newage Group, said in an interview. Rival Viyellatex Group forecasts its annual exports to ..

Source: Economic Times

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Chinese, Russian and Korean firms keen to invest in PSM: Abdul Razzak Dawood

ISLAMABAD: Advisor to Prime Minister for Commerce, Textile, Industry and Production, Abdul Razak Dawood on Monday said that Russian, Korean and Chinese companies have shown interest in investing Pakistan Steel Mills (PSM), ARY News reported. While briefing Senate Standing Committee on Production and Industries, he said that machinery of Pakistan Steel Mills (PSM) has become old and needs a huge amount of money for its functioning. Several companies from China, Russia, Philippine and  Korea have expressed interest to invest in PSMs, while the recommendation of giving it on lease is also under consideration, he said. The PM’s assistant further said that the Chinese company has completed the overall assessment of PSM. He said that the situation will get more clear after the appointment of transaction advisors. Earlier in the day, Adviser to Prime Minister on Finance Dr. Abdul Hafeez Shaikh emphasized the need to incentivize the real estate sector as it can attract investment from Pakistani diaspora. He was chairing a meeting in Islamabad on Monday to analyze different financial models for “Naya Pakistan Economic Zone alongside Islamabad Expressway”. Shaikh assured government’s support for the development of the housing sector as it has the potential of providing employment opportunities to the youth. The adviser further directed to hold another meeting with all relevant stakeholders in the current week for deliberating upon the financial plans prepared by Naya Pakistan Housing Authority (NPHA) for this project.

Source: Ary News

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No new taxes imposed by the Govt on Textile Export: FBR Chairman

FBR-Chairman-Shabbar-Zaidi-No-Taxes-Textile-Daily-Times-DTFaisalabad: Federal Bureau of Revenue (FBR) Chairman Shabbar Zaidi stressed on Monday that Government has not imposed any new tax on Textile Export. “Export sector already had [tax related] exemptions and they still have it”, said the FBR Chairman while brushing aside the impression of new taxes levied on the textile export. In a press conference, Chairman FBR said, “It’s our policy to not impose any new taxes on the textile export.” Talking about the large scale transfers and appointments of the FBR officials, Zaidi said it was done in accordance with the law. He also added that, “A new FBR will be formed by the people who are present inside the entity today.” On the note of Amnesty scheme, he boastfully mentioned the success of this scheme across the country. Shabbar Zaidi said that the system will be improved in consultation with the business community. “Pakistan is facing a historic current and trade deficit,” he pointed out while assuring that the Afghan transit trade and smuggling issue were being seriously addressed by the board.

Source: Daily Times

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Pak forms sub-committee to identify textile sector issues

Pakistan’s National Assembly Standing Committee on Finance, Revenue and Economic Affairs last week formed a sub-committee to identify problems being faced by the textile sector due to zero rating on export and other taxation issues related to exports, imports and the domestic industry. The sub-committee will submit its report to the committee within 30 days. A meeting of the committee was held under the chairmanship of Asad Umar, according to Pakistani media reports. The committee recommended the Federal Board of Revenue (FBR) to arrange a detailed briefing about the criteria of tax refunds and the role of the newly-created refunds company under FBR. (DS)

Source: Fibre2fashion

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Pakistan : Textile has a talent problem

The good thing about Pakistan’s quinquennial balance of payment crises is that it brings economic discussions into mainstream. Primetime talk-shows abandon routine shouting matches, lining up their panels with preeminent economists – spirits of Economic Advisory Councils of present and past. Their diagnosis? That Pakistan’s export-base is small and narrow; and that expanding textile exports is the economy’s only chance to break out of this rut. Their prescription is that fiscal incentives for the sector – from tax-breaks on BMR, sales tax exemption and rebates – to an expansionary monetary regime to encourage capacity expansion, should stay. The badgering current setup has received from top economists on monetary policy tightening disregards that borrowing rates for exporters on EFS and LTFF have remained unchanged. So is the mounting evidence that the sector in the past has misused the financing facility, redirecting funds toward more lucrative projects such as in real estate. Nevertheless, it is of little surprise that textile is set to remain the policymaker’s lovechild for the foreseeable future. Compared to IT or services export where other regional players have made strides based on better-trained human resource and innovation, textile is a lower-hanging fruit. Domestic value-chain is already well-established. Furthermore, success stories such as Bangladesh and Vietnam abound, raising hope that with the right set of enabling environment, a turnaround is just waiting to happen. The problem with this diagnosis is that it suffers from a serious lack of imagination and outsources all locus of control to policymakers. Textile’s troubles are equally a function of poor marketing of domestically-manufactured products in global markets. And while macroeconomists failing to give marketing its due weight maybe an occupational hazard, it is hard to believe that textile seths are just as oblivious. Survey top 30 garments or composite mills and preponderance will have the chief marketing role occupied by a family member. That’s not always a bad deal, as sponsor prodigies are often able to afford a higher education abroad. But what about the teams working under them? A similar survey of 10-year annual reports from a Karachi-based top business school reveals that Pakistan’s largest industrial sector (by number of units) has never showed up among the top-five hiring sectors. In contrast, banking & financial institutions have always hired a lion’s share, followed by FMCG, pharmaceutical and distribution. These sectors remain top preference for graduates based on lucrative pay scales and possibility of international exposure. Even the nascent IT industry has broken into the ranks in recent years. Has the textile sector’s fortune throughout the past decade been so abysmal that it could not afford to compete with FMCG MNCs? Incorrect, if one compares the ROE of top-5 textile companies in the KSE-100 with top-5 FMCG firms. The exporting sector has, on average, beaten FMCG returns by a significant margin. The problem remains the seth-mentality, and this is best at-display in the ordinary interactions of textile employees with their service providers, vendors and bankers alike. Account managers with five-year experience are paid three times the minimum wage. The ostensible marketing job is performed by the same personnel who also take care of order confirmation, procurement, sales, dealing with the buyers, bank and shipping agency for finalizing invoice, and filing E-form, BL and Goods Declaration.

Source : B Recorder

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Regulation can lift barriers to fashion circularity

COPENHAGEN – Fashion brands need to speed up moves towards circularity according to a new report published today by Global Fashion Agenda, which shows only modest progress towards a set of ambitious targets by 90 brands and retailers who signed up to its 2020 Circular Fashion System Commitment in 2017. Today’s two year status report reveals that just 21 per cent of the original 213 targets, from four key 'action points', have so far been met by brands such as Nike, H&M, ASOS, Gap Inc., PVH, Kering and VF Corporation. Yet GFA still remains hopeful of further progress. Speaking to Ecotextile News ahead of the report’s launch, Jonas Eder Hansen, Public Affairs Director, said he was confident that signatories will reach at least 50 per cent of the targets being set by the deadline of 30 June 2020. “Circularity is not a quick fix and requires companies to rethink current models. This takes time and signatories have spent the first period to adjust and are ready to accelerate implementation towards June.” The news coincides with a meeting in Brussels today between fashion industry stakeholders to discuss the new report and how to establish a circular fashion system. At the roundtable event, GFA will call for governments and policymakers to develop new regulatory frameworks to accelerate the change from current linear business models into new circular ways to make fashion.

Source: Eco Textile

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Pakistan’s Textile Sectors Up in Arms Against Newly Enacted Tax Regime

A near tug-of-war has resulted between the Imran Khan led Pakistan government and the textile sector. Other industrial sectors including sugar and cement have also joined them according to reports. The Pakistani government has recently taken a slew of measures recently in their budget for 2019-20 financial year which aims to increase tax to GDP ratio as well as come out of the economic turmoil they country is in. Among the measures that the industrial sectors feel went against them are increase in customs duty, increase in minimum wage, increase in excise duty and removal of zero tax rated benefits. The textile sector which is a major contributor to Pakistan’s GDP and export earnings is expected to get hurt the most as zero-rated tax status has been removed. Pakistan Government has abolished zero tax regime for all the five export oriented industries that include textile, leather, carpet, surgical goods and sports goods. The industry sector of Pakistan has been facing severe challenges due to high currency depreciation (about 45%), doubling of interest rates, lower consumer spending and so on while the Government has further increased custom duties across the board. Also, the 10% tax credit which the industry receives for capacity expansion and modernisation of their plants is going to be withdrawn as well. The turnover tax has also been increased in an attempt to grow the tax collection coffers. According to Pakistan’s Federal Board of Revenue (FBR), the government aims at procuring a tax basket of Rs 516 billion for the fiscal year 2019-20. At the same time, the government has also decided to put an end to Rs 300 billion tax exemptions offered to various industrial sectors. The government announced that it plans to meet the remaining tax target through administrative measures. In line with that, Pakistan government has proposed increase in the tax rate for services sector from 2% to 4% of the gross turnover amount. These moves have however, generated stiff resistance from the industrial bodies with the All Pakistan Textile Processing Mills Association (APTPMA) taking the lead in giving a shutter down call. The APTPMA in Karachi pronounced a death knell situation for the textile processing mills for both the wholesalers and retailers due to flawed government policy. They fear that entire production has ground to a halt following the end of zero-rated regime for the textile sector. In addition, the association bemoaned the imposition of 17 to 20 percent sales tax. In an emergency meeting that was held recently, APTPMA Chairman Mohammad Arif Lakhani said, “Our textile industry sector has been forced to shut shop and don’t take it as if we all have gone on strike. The problem that has engendered this situation is being forced on us as our customers have stopped sending any work of dyeing and printing. This has rendered thousands of our workers jobless.” An APTPMA release stated, “The meeting unanimously passed a resolution demanding an extension for sales tax implementation on CNIC basis besides continuing SRO1125 and zero rating till July 31.” The association further said, “We have asked the government to find a solution for sales tax issue by July 31 after holding negotiations with dyeing and weaving sectors along with textile retailers and wholesalers. Contrastingly, the APTPMA body in Faisalabad has declared all shutters down till the new taxes are withdrawn. The shutdown of the mills has dire implications and amounts to the entire Pakistan Textile industry coming to a standstill.

Source: Textile Excellence

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