Exporters demand customs duty waiver on cotton yarn

KARACHI: Value-added textile exporters on Tuesday demanded the government of abolishing customs duty on import of cotton yarn to support the industry and ensure timely completion of export orders.

“The gravity of situation demands the government to immediately abolish customs duty on import of cotton yarn either by passing through a Presidential Ordinance or by an immediate act of Parliament, in the interest of export and the country,” said Muhammad Jawed Bilwani, Chairman, Pakistan Apparel Forum & Former Central Chairman, Pakistan Hosiery Manufacturers & Exporters Association (PHMA) in a statement.

The value-added textile exporters are highly perturbed over the unavailability of cotton yarn – which is basic raw material in the local market despite huge export orders are available with the value added textile.

However, where cotton yarn is available is of sub-standard quality owing to which exporters are unable to meet export commitment. To ensure availability of cotton yarn, PHMA had earlier demanded the Government to allow duty-free import of cotton yarn to facilitate Value-added textile export sector to achieve milestone in exports as cotton yarn was unavailable in the local market.

Nevertheless, the government considered removing the Regulatory Duty only. Sense of severe unrest and uncertainty prevails as exporters feel it “discriminatory” because in the case of cotton, the Government had allowed complete duty-free import.

Removal of regulatory duty has supported the value-added textile sector to some extent, whereas, the situation necessitates and demands to also remove the customs duty to fully support the value-added textile sector to complete their export orders which they have materialized for the next several months.

The government must realize the sensitivity of the matter to support the value-added textile exports as due to unavailability of cotton yarn, the prices of cotton yarn of 30/1 were 235 per pound during the month of October 2020 and now in January 2021 were 260 per pound there has been an increase in the yarn rates by 9.62 percent which has also brought an upshot in the cost of manufacturing pushing the exporters towards unviable situation and un-competitiveness.

The gravity of situation demands the government to immediately abolish customs duty on import of cotton yarn either by passing through a Presidential Ordinance or by an immediate act of Parliament, in the interest of export and the country.

The government must accord high priority to the matter in order to turn its policy to enhance export into reality. The exporters profoundly appreciate the government for streamlining and fully automating the sales tax refunds which have been working efficiently and delivering 99 percent result.

While the customs rebate disbursement has also been done rapidly with deliverance of 99 percent. The exporters also request the government to also streamline and automate the system for disbursement of DLTL/ DDT which should be electronically transferred to the exporters with export proceeds.

Value Added Textile Export Industry which contributes around 62 percent in total exports, provides highest urban employment particularly to female workforce and supports approximate 40 allied industries.

In view of its significant importance in the economy and free market mechanism, the government must consider the appeal of the value-added textile sector for duty-free import of cotton yarn to ensure availability of cotton yarn of good quality.

Such state of affairs demands the government to remove 5 percent custom duty on import of 32 single yarn and below count and the exporters, manufacturers and importers, shall be given full liberty to import yarn from any country till the scarcity of cotton yarn is controlled and required quantity of yarn is available in abundance in all Pakistani markets to complete the export order smoothly.

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