Karachi, May 2, 2025 – The Karachi Chamber of Commerce and Industry (KCCI) has strongly recommended the removal of the 5% regulatory duty on polyester yarn in its official tax proposals for the upcoming federal budget 2025–26.
This call aims to enhance the competitiveness of Pakistan’s textile sector by reducing production costs and encouraging growth across the entire value chain.
In its detailed submission, the KCCI emphasized that eliminating the regulatory duty on various forms of polyester yarn—including Polyester Pre-Oriented Yarn, Fully Drawn Yarn, Draw Textured Yarn, and Polyester Spun Yarn—will significantly reduce input costs. These yarns fall under several HS codes such as 5402-4600, 5402-4700, 5402-3300, 5509-2100, and 5509-5100.
KCCI argued that removing the duty would make raw materials like polyester yarn more affordable for manufacturers, leading to cheaper fabric prices for consumers. This cost reduction would also translate into more efficient production, greater export competitiveness, and better economic outcomes for the textile industry. Moreover, a fair and distortion-free tariff structure would support long-term industry stability.
The KCCI cited the stance of the Pakistan Yarn Merchants Association (PYMA), which also advocates the removal of the regulatory duty. PYMA supports a return to the cascading tariff system that was in place until 2005. That system maintained a 2% duty difference at each stage of the polyester yarn value chain, helping to balance costs among raw material suppliers, manufacturers, and exporters. According to both KCCI and PYMA, reinstating this structure would ensure equitable pricing and protect all stakeholders in the polyester yarn market.
The current 5% regulatory duty, they say, has had multiple negative consequences. It has led to increased yarn costs, eroded the competitiveness of Pakistan’s textile exports, and made fabric more expensive for local consumers. Additionally, the disrupted pricing balance discourages investment, stagnates industry growth, and leads to job losses.
The KCCI has reiterated its position that supporting the polyester yarn sector through rational tariff policies is critical for Pakistan’s broader industrial and economic progress. Removing the regulatory duty is seen as a vital step toward achieving that goal.