Pakistan slaps 10% import duty on Indian cotton yarn

19 Oct '15

3 min read

The import of cotton yarn from India by Pakistani textile companies is set to get costlier with the government announcing a 10 per cent import duty that comes into effect from November 1, 2015, according to media reports.

Finance Minister Ishaq Dar announced the decision after holding a series of meetings with All Pakistan Textile Mills Association (APTMA). He also held discussions with representatives of the value added sectors in Islamabad at the weekend. Later, Dar told reporters about the different steps taken to resolve the problems being faced by the textile sector.

He said that regulatory duty of 10 per cent would be levied on the import of cotton yarn and grey and processed fabric with effect from November 1, 2015.

Among other steps, the Export Re-financing Facility (ERF) rate shall be reduced by 1 per cent (100 basis points).

The ginning and spinning sectors will qualify for Long Term Finance Facility (LTFF) and the rate of LTFF will be reduced by 100 basis points.

To resolve the issue of pending sales tax refunds, committees consisting of representatives from industry and the Federal Board of Revenue (FBR) will be constituted in each Regional Tax Office (RTO).

Dar also said the government would enhance efforts to prevent smuggling.

Representatives of the textile industry thanked the finance minister for the steps announced and assured they would extend support to the government in its efforts for the promotion of a tax culture.

The APTMA had earlier criticized the government for the rising cost of doing business in Pakistan and had called for bringing down regulatory duty on import of Indian yarn besides slashing the prices of electricity and gas tariffs.

But the 10 per cent import duty on cotton yarn export from India has drawn a sharp reaction from Faisalabad Chamber of Commerce and Industry president Chaudhary Muhammad Nawaz. He described it as a blunder which is tantamount to killing the value added textile sector which was the mainstay of the textile industry. Nawaz warned that there could be a backlash against the steps announced by Dar.

Nawaz said APTMA represents only one segment of spinners.”We support them as regards high cost of doing business in Pakistan. But the imposition of duty on imports of yarn is highly detrimental to the value added textile sector which was earning precious foreign exchange despite the daunting internal and external challenges.”

He demanded that government withdraw the unilateral decision of imposing duty on yarn and start negotiation with all stake holders to evolve a consensus policy to take the textile sector out of its present crisis. (SH)

Fibre2Fashion News Desk – India

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