Nearly all of Pakistan's 400 textile spinning mills shut down to protest against the imposition of a 15 percent regulatory duty on exports of all types of cotton yarn, millers said.

Pakistan is the world's fourth biggest cotton producer but often has to turn to imports to feed its textile sector, which accounts for about 60 percent of its exports.

The government imposed the duty last week after demands by textile workers, including garment, towel and bed-ware makers, to ban cotton and yarn exports because of short supplies that they said were hurting their business.

But yarn makers said the export duty was not fair as they want to export their surpluses, and retaliated with a two-day strike that began to press the government to withdraw the duty.

"The regulatory duty should immediately be withdrawn, it's a wrong policy," said Gohar Ejaz, a senior official of the private All Pakistan Textile Mills Association.

"We will have to close our factories for two days a week as production will be more than demand and we can't export the surplus because of the duty," he said.

The duty has been imposed initially for a period of 60 days.

Millers say there is no yarn shortage in the domestic market and they export out of a surplus that ranges between 55,000 to 60,000 tons a month. Yarn exports fetch $1.5 billion annually, they say.

Pakistan faced a shortfall of about 3 million bales of cotton this year after estimates that the 2009/10 crop would produce 12.70 million bales against domestic demand which fluctuates between 14 million and 16 million bales.

With no bar on exports, growers also sell their output in the international market to fetch better prices, meaning more has to be imported.

Cotton prices in the domestic market have peaked at their highest ever levels in recent weeks after India imposed a ban on cotton exports last month to improve its domestic supplies.

Pakistani importers had been relying on India to make up their shortfall of cotton. (Reuters)