Traders of polyester filament yarn (PFY) have highlighted that heavy taxes are alarming for textile exports, therefore, the government should reduce the taxes on raw material.

Prices of PFY, a basic raw material for the textile industry and small and medium-sized units, have increased sharply in local markets, said Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Standing Committee on Imports Deputy Convener Khawar Noorani. “It is catastrophic for exports of the textile industry,” he said.

According to the State Bank of Pakistan (SBP) first quarterly report 2020-21, the output of textile sector increased 2.2% in the first quarter (Jul-Sept) of fiscal year 2020-21 compared to marginal growth of 0.2% in the same period of previous year.

The lacklustre performance of the textile industry could be attributed to a couple of factors, the quarterly report said.

First, the harvest of local raw cotton, which serves as an input for the upstream cotton textile industry, remained below par. Less availability of raw material, in turn, necessitated imports of the commodity to the tune of $208 million, which was the highest first-quarter import bill since fiscal year 2008.

Moreover, the increased reliance on imported cotton also raised costs for the export-oriented industry, said the report. The second factor that hampered the growth of cotton textile production was the low international demand for textile products.

Exports grew 2.9% in value terms on the back of better prices fetched by textile products, but the demand for cotton apparel did not pick up in major destinations in Europe.

“We request Prime Minister Imran Khan to take steps to save the industry from this catastrophe and demand that the government abolish all taxes on PFY import,” Noorani said.

Industry stakeholders feared that if the government did not immediately allow duty-free import of PFY, Pakistan would lose a large number of export orders.

Former chairman of the Pakistan Yarn Merchants Association (PYMA) stated that the local PFY manufacturers had failed to meet demand of the export-oriented industry and small and medium enterprises (SMEs), but despite that, the government imposed regulatory duty on PFY imports, which was unfair.

Published in The Express Tribune, March 17th, 2021.

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