KARACHI: APTMA has expressed great concern over the callous attitude of the government in increasing the duty on import of raw cotton from 2 per cent to 3 per cent which along with the additional duty of 1 per cent has increased the incidence of total import duty to 4 per cent.
The decision of the government is at a time when the textile industry is reeling from the effects of a total crop failure in the country. Production of cotton is declined by almost 35 per cent.
APTMA has been pleading with the government to totally remove import duty on cotton so that the textile industry can operate in an efficient manner. But instead of accepting reality, they have chosen to increase duty and further exacerbate the industry’s plight.
It is not possible for the textile industry to continue to operate in these conditions and contribute to higher exports and provision of yarn to the domestic downstream if they are made to pay such exorbitant amount of duty on its basic raw material.
Pakistan has become a net importer of raw cotton and even then the textile industry is trying to remain competitive while contributing to the national exchequer as well provides millions of jobs. But if we have to import over 3 million bales due to crop failures then import duty must be abolished.
The government must take account of the situation immediately and move to abolish all duties and taxes on import of raw cotton, said chairman APTMA. The industry is already suffering due to high cost of doing business and acute shortage of energy in the country and now even has to compete with a surge in cotton yarn imports from its regional competitors.
Tariq Saud further said that the Federal Minister for Finance, Ishaq Dar in his Budget Speech has accepted that due to the failure of cotton crop by about 35 percent this year the growth rate has declined by about 0.5 per cent. He said that the cultivation of cotton this year is expected to decline by approximately 25 percent which will ultimately decline the availability of cotton to the spinning industry compelling them to import cotton at 4 percent custom duty.
Cotton is one of the basic raw materials of Textile Spinning Industry and constitutes around 70 per cent of raw material cost. The government in the Federal Budget 2014- 15 had levied 1 per cent import duty which was further enhanced to 2 per cent in the Federal Budget 2015-16 along with sales tax @ 5 per cent. FBR vide SRO 1178(I)/2015 dated 30-11-2015 had imposed 1 per cent Additional Duty on import of cotton thus the total duty became 3 per cent. The government in the Federal Budget 2016-17 has further increased Custom Duty by 1 per cent and has kept the Additional Duty of 1 per cent intact in the Federal Budget 2016-17, thus total duty become 4 per cent which makes the basic raw material more expensive and it made the domestic industry unable to compete in the international as well as domestic market which can be confirmed from the fact that in the 11 months of the current financial year the imports of cotton yarn has almost doubled as compared with 2014-15.