KARACHI, July 29, 2024 – Sohail Nisar, Senior Vice Chairman of the Pakistan Yarn Merchants Association (PYMA), alongside Vice Chairman Jaweed Khanani and members of the Executive Committee, has expressed deep concern regarding the imposition of regulatory duty (RD) on polyester yarn under HS Codes 5402.3300, 5402.4700, and 5402.4600.
PYMA Vice Chairman Nisar urged Prime Minister Shahbaz Sharif, Finance Minister Muhammad Aurangzeb, and Minister for Industries and Production Rana Tanveer Hussain to intervene and rescind the 5% RD on this essential textile raw material. He warned of dire consequences for the textile sector and its associated small and medium enterprises (SMEs) if the duty remains.
PYMA officials highlighted that both last year and this year, the National Tariff Commission (NTC) recommended removing the 5% RD on polyester yarn. Despite meetings within the Ministry of Commerce agreeing to abolish RD, it was retained in the Federal Budget for 2024-25. This decision has triggered widespread anxiety within the textile industry, particularly among yarn importers.
PYMA vice chairman emphasized that the 5% RD effectively amounts to 8% due to its compounding impact and called on the government to instruct the Federal Board of Revenue to eliminate this duty.
The PYMA argued that levying RD on polyester yarn is unjustifiable since it is a fundamental raw material essential for affordable fabric production. With rising operational costs, including utility charges, local business activities have stagnated, and industrial operations are running below capacity. Nisar pointed out that the local textile industry already benefits from an 11% customs duty subsidy. Adding a 5% RD during the import stage pushes the effective duty rate to around 19-20%, severely impacting competitiveness against cheaper imported cloth, which currently enjoys lower duties.
PYMA office bearers criticized the inconsistency of applying RD to goods like polyester yarn (HS Codes 5402.4600, 5402.4700) that are not locally manufactured, labeling it detrimental to domestic production. Furthermore, imported cloth and bleached cloth face a combined duty of 13%, making them cheaper than locally produced equivalents. This disparity, Nisar warned, is pushing the local textile industry to the brink of collapse.
In an appeal, Nisar, Khanani, and Executive Committee members urged for the immediate removal of RD on imported polyester yarn under HS Codes 5402.3300, 5402.4700, and 5402.4600. They stressed that this step is crucial to safeguarding the textile sector, particularly SMEs, from imminent closure. Nisar cautioned that further tax burdens would exacerbate the situation, potentially leading to widespread industrial shutdowns and increased unemployment.
The textile sector, a cornerstone of Pakistan’s economy, faces significant challenges, and industry leaders believe that removing the RD on polyester yarn is a necessary measure to restore competitiveness and stability in the market.