Yarn manufacturers oppose additional 2.5% regulatory duty

KARACHI: Pakistan Yarn Merchants Association (PYMA) chairman Danish Hanif has expressed frustration over the non-provision of relief on imported raw materials for the textile industry.

While expressing disappointment over SMEs in Budget 2020-21 and opposing the imposition of a further regulatory duty of 2.5 percent, Danish Hanif termed the move as disastrous for the textile sector and SMEs.

“The government should provide equal opportunities to all sectors of the economy in a conducive environment to meet the challenges of the devastating effects of the COVID-19 epidemic on the economy and have to create employment opportunities and equal business opportunities will have to be provided on the basis of a uniform policy for the export, import, and industrial sectors”, he said.

Danish Hanif said that Polyester filament yarn is an important raw material for weaving, knitting, and home textiles. “Most of the needs about 70 percent of the user industry are met by imports because the local manufacturers only produce basic specs and are only able to meet about 30 percent of the total demand,” he added.

 “Proposed budget calls for a 3 percent value-added tax to be collected from commercial importers of PFY at the import stage. Commercial importers of Raw Materials like PFY sell their goods to the SME sector at a minimal profit. This is clearly a very harsh and unrealistic tax and would end up increasing the cost to SMEs sector”, Danish Hanif feared.

Danish Hanif further said, “We appreciate the fact that the government has reduced the withholding tax on commercial importers from 3 percent to 2 percent under erstwhile SRO 1125 while the withholding tax on industrial importers is 1 percent,” he added.

He further added, “We believe that the materiel should be uniform for both classes of importers considering that government intends to remove the discriminatory withholding tax regime for other sectors.”