Govt urged to abolish duty, taxes on cotton yarn import

KARACHI: Value-added textile sector has urged the prime minister to abolish all duties and taxes on cotton yarn imports for re-export with value addition to earn the much-needed foreign exchange for the country and to reduce trade gap, a statement said on Saturday.

Muhammad Jawed Bilwani, chairman of the Pakistan Apparel Forum, and chief coordinator, value-added textile export sector said that the sector has the largest share of 53 percent in the total textile exports of Pakistan worth $11.08 billion of the total exports of $20.44 billion and 89 percent of the total textile exports of $12.45 billion.

Cotton yarn, being the basic raw material of the value-added textile export industry, is not easily available in the domestic market, owing to low cotton yield or substandard quality with higher rates, he added.

The cotton yarn prices have increased 30 percent, making the value-added textile export sector uncompetitive in the international market, Bilwani said, adding that this will lead to negative impact on exports, which have increased during the current fiscal year.

The value-added textile exporters fear that if the government does not take prompt action to ensure easy availability of quality cotton yarn at best prices, exporters will fail to meet their export orders, which were booked six months ago, he said.

He emphasised on the fact that globally duty-free raw materials import is allowed, while exports of raw materials are restricted to benefit value addition to earn more foreign exchange.

Bangladesh’s value-added textile exports have reached $30.24 billion (FY16/17), as it allowed duty-free import of raw material – cotton yarn and always encourage value addition, which is their key to success.

The value-added textile export sector was already facing stiff competition in the global market due to highest cost of inputs – gas, electricity and water as compared to regional competitors such as Bangladesh, India, Vietnam, Sri Lanka.

Moreover, stitching units registered with the Ministry of Textile Industry cannot import yarn for the manufacturing of garments meant for export under the DTRE scheme, Bilwani said.

The value-added exporters have requested the prime minister to abolish all duties and taxes on cotton yarn import and its import should be allowed freely from anywhere for re-export with value addition in the light of free market mechanism.