Pakistan govt mull over reducing regulatory duty on cotton yarn import

Pakistan government likely to consider reduction in regulatory duty on the import of cotton yarn to benefit the garment sector as the cotton yarn, fabric commercial and value addition sector exporters are now facing 10% regulatory duty on imports from November 1, 2015, a source in the Ministry of Finance has hinted.

The performance of value addition by woven garments sector is 846%, hosiery/knit garments 616% and spinning sector is 59%.

In the recent meeting with Finance Minister Ishaq Dar, the representatives of the sector assured support in this regard. Dar informed them that the value added textile sector could avail benefits from Duty and Tax Remission for Export (DTRE) scheme and they would not be affected from the said regulatory duty. But on the other hand, the DTRE secretary said that this facility was currently not available in the DTRE scheme.

Even Pakistan Customs under Federal Board of Revenue (FBR) is not allowing DTRE facility to those small and medium units of the sector, who do not have 100% in-house manufacturing facilities, said a Pakistan Apparel Forum spokesman.

In DTRE rules, there is no restriction for stitching units, manufacturing cum exporters for duty free import of raw material including cotton yarn.
The exporters of textile garments sector have proposed the government to authorise the textile ministry to grant permission to textile units for import of raw material under the DTRE scheme.

The PAF spokesman said that the import of Indian fabric is already banned as per the import policy 2012-15 and our government has imposed 10% regulatory duty on import of fabric from India. The 90% value added textile sector does not take long term financing and majority of small and medium units do not take export refinance.

He said that the regulatory duty would destroy the small and medium size units, which provides huge employment including poor female workers, who work on stitching machines and the government wants to create unemployment, chaos and disaster.

All over the world, export of raw material is greatly discouraged and restricted while import of raw material is always allowed just because of value addition and earning more foreign exchange. In comparison to this, in Pakistan, it is opposite and essential raw material for value additions is allowed to be exported.

Exports of readymade garments have increased nearly four times in value from 1990 to 2015, from $1 billion in 1990 to $4 billion.

The Pakistan Apparel Forum (PAF) said that the value added apparel sector was representing Pakistan Hosiery Manufacturers and Exporters Association (PHMEA), Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA), Pakistan Knitwear and Sweater Exporters Association (PKSEA) and Pakistan Cotton Fashion Apparel Manufacturers and Exporters Association (PCFAMEA), who were major stakeholders of the value added apparel sector.