Big holes in textile pocket

Some companies allegedly supply imported material to public sector and receive concessions meant for promoting local industry

A Sunday Times investigation has revealed that some textile-supplying companies which receive government concessions aimed at encouraging local industries are not keeping their side of the bargain.

These companies are required to supply government institutions, including the military and education ministry, with locally produced or processed textiles, but are allegedly supplying imported material and collecting the concessions, resulting in financial losses to the state, Textile Ministry sources told The Sunday Times.

Schoolchildren attend a uniform-distributing ceremony

Our investigation shows that some textile suppliers were unable to produce or process the required quantity locally as per the agreement with the government. The Sunday Times learns that one manufacturer has stopped production, but is still being allocated a quota to provide material.

In terms of a scheme aimed at promoting the local textile industry and creating more jobs, the government pays a higher sum to purchase the processed textiles than the price for imported material.

Textile Ministry sources put the blame on the Domestic Textile Allocation Committee (DTAC), which was appointed to distribute the quotas and oversee the supplies. They said the failure of the DTAC to fully implement Finance Ministry instructions had led to the misuse of the scheme and given room for these companies to supply imported material and collect financial rewards.

In February 2005, the then Treasury Secretary P.B. Jayasundara said the government had decided to procure the public sector textile requirements -- for security forces, health services, the Education Ministry which provides free school uniforms, and other government agencies -- from local manufacturers.

The Textile Quota Board (TQB) was required to assess the requirements and make arrangements to mobilize the local manufacturers towards production of such material. In March 2005, a cabinet decision was taken to restructure the TQB following the lapse of the international quota system under the World Trade Organisation’s Multi-Fiber Arrangement. One of the main functions of the restructured board was to act as a facilitator for the procurement of public sector textile requirements from local textile manufacturers.

In April 2005, a committee was also appointed by the Secretary to the Ministry of Industry to recommend the changes necessary to carry out the new functions assigned to the TQB. Until necessary amendments were made to the TQB Act, procedures to be adopted for the procurement of textile requirements of government institutions from local textile manufacturers were decided upon.
In June 2005, an amendment to the circular was made. Accordingly, the annual textile requirements up to a value of Rs. 2 million could be procured in terms of the existing guidelines of Government Tender Procedure from local manufacturers certified by the DTAC. The guidelines also allowed the DTAC to continue to deal with procurement of textile requirements exceeding above Rs. 2 million.

Accordingly, the procurement process was to be handled by a steering committee (DTAC) that consisted of officials representing the Ministries of Industries, Finance, Education, Defence and Law and Order, the TQB, the Textile Training and Service Centre, the Customs, and local textile manufacturers.

But the Textile Ministry sources claimed that the DTAC had not been properly functioning and as a result some of the manufacturers were even providing sub-standard material. They said the ministry had received complaints that material supplied to the security forces for camouflage uniforms were colour-fast and not durable.

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