Traders demand cut in duty on polyester yarn
Traders have urged the government to reduce customs duty on the import of polyester filament yarn to facilitate the use of synthetic fibre in textile manufacturing.
Acting Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Suleman Chawla proposed that the customs duty on polyester filament yarn should be slashed to 7% from the current 11% to give the much-needed boost to the use of synthetic fibre in the textile industry.
“Synthetic fibre is the future as it has assumed further importance in Pakistan’s peculiar scenario where our domestic production is declining on the one hand and cotton demand is rising steadily on the other,” Chawla pointed out.
He recommended that in order to encourage the manufacturers, the government should consider levying the same withholding tax at the import stage for both the manufacturers and commercial importers of polyester filament yarn.
“The proposal of reducing customs duty will be very beneficial for the textile industry because not only our cotton production is going down but also the whole world is moving towards the consumption of synthetic fibre,” Saad Ziker, textile sector analyst at Topline Securities, told The Express Tribune.
Also, “the lower cotton production is now becoming a major concern for the textile industry, which is the backbone of Pakistan’s exports, because it results in more cotton imports and increase in the overall import bill.”
Keeping in view the efforts to reduce the current account deficit, there was a need of such policies which took exports of goods made from the imported raw material to much higher levels than imports, he said.
The acting FPCCI chief also emphasised that the 3% value added tax at the import stage on the commercial importers of polyester filament yarn should be abolished to make the raw material affordable for the textile industry.
“In the current scenario, duty reduction is not a right decision as the government is trying to cut the current account deficit,” remarked Ali Asif, textile analyst at Insight Securities.
However, in the long run, the reduction in levies on synthetic fibre might play a significant role in the textile industry and support exports, he said.
“Although the global textile industry is transitioning towards synthetic fibre, our textile sector still heavily counts on raw cotton,” Asif said.
Published in The Express Tribune, June 1st, 2022.
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