The federal government should take notice of the excessive taxes and duties imposed on polyester yarn, which is the main raw material of the textile industry, said Pakistan Yarn Merchants Association (PYMA) Central Chairman Saqib Naseem.
In a meeting with office-bearers of the Karachi Chamber of Commerce and Industry (KCCI) on Tuesday, Naseem urged the government to reduce the customs duty on polyester yarn to 7% from the current level of 11%.
The government had assured the industry of bringing down the customs duty to 9% in the current fiscal year’s budget, he recalled, adding that the promise had not yet been fulfilled.
He demanded that the government abolish the anti-dumping duty in the wider interest of the textile sector.
He underlined that previous governments had provided relief to the industry through different textile packages. On the contrary, the present government burdened the industry with taxes.
Highlighting the importance of commercial importers, Naseem said that they acted “as a bank” for thousands of small-scale textile units, which could not import large quantities.
Thus, the government should reduce taxes and duties to arrest the soaring cost of production, he added.
In addition, Naseem demanded that the government reduce the turnover tax to 0.1%.
He was of the view that the excessive turnover tax was making it difficult for them to continue their business operations, given the limited profit amid rising cost of production.
On the occasion, KCCI President Muhammad Idrees said that the authorities should cooperate with traders in order to facilitate industries and exports.
Talking to The Express Tribune, AHL analyst Arsalan Hanif underlined that polyester yarn was the basic raw material used by the textile mills.
Their demand to reduce customs duty would make them competitive against other countries and would reduce their cost of doing business, he said.
He said that the move would encourage new textile units as well, as it would increase their profit and enable them to attract new customers by selling goods at competitive prices.
However, the reduction in duties would result in an increase in imports and the import bill, he said.
“Reduction in turnover tax will be beneficial to the entire sector as this will be the biggest incentive for the textile companies,” said Hanif.
Topline Securities analyst Saad Ziker was of the view that the federal government should fulfill its promise of reducing the customs duty.
It would provide some relief to the textile industry in this inflationary environment, he said and termed the industry the “backbone of our economy”.
He maintained that the government should take those steps which would be beneficial to the export sector and result in contraction of the current account deficit.
On the contrary, Arif Habib Commodities CEO Ahsan Mehanti said that if the government wanted to accumulate forex reserves, then exports should be prioritised over taxes at the import stage. “Any tax concession to exporters is beneficial,” he added.
Published in The Express Tribune, November 24th, 2021.
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