PYMA urges government to abolish RD on Yarn, citing threat to the textile sector, SMEs

Sohail Nisar, Sr. Vice Chairman of the Pakistan Yarn Merchants Association (PYMA), along with Vice Chairman Jaweed Khanani and members of the Executive Committee, expressed deep concern regarding the imposition of regulatory duty (RD) on polyester yarn under HS Codes 5402.3300, 5402.4700, and 5402.4600. He 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. The potential dire consequences for the textile sector and its associated small and medium enterprises (SMEs) cannot be ignored.

PYMA office bearers highlighted that last year and this year, the National Tariff Commission (NTC) had recommended the removal of the 5% RD on Polyester Yarn. Despite meetings within the Ministry of Commerce, it was agreed to abolish RD; however, the RD was unfortunately retained in the new Federal Budget for 2024-25. This decision has triggered widespread anxiety within the textile industry, particularly among yarn importers. He emphasised 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.

They argued that levying RD on Polyester Yarn is unjustifiable since it constitutes a fundamental raw material for affordable fabric production. With rising operational costs, including utility charges, local business activities have stagnated, and industrial operations are running below capacity. Mr. Sohail 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. This situation is not just unfair; it is detrimental to the industry.

PYMA office bearers criticised the inconsistency of applying RD to goods like Polyester Yarn (HS Codes 5402.4600, 5402.4700) that are not locally manufactured, labelling it detrimental to domestic production. Furthermore, he noted that imported and bleached cloth face a combined duty of 13%, making them cheaper than locally produced equivalents. This disparity, Mr. Sohail warned, is pushing the local textile industry to the brink of collapse.

In an appeal, Sohail Nisar, Jaweed 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, stressing that this step is crucial to safeguarding the textile sector, particularly SMEs, from imminent closure. He cautioned that further tax burdens would exacerbate the situation, potentially leading to widespread industrial shutdowns and increased unemployment.

 

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