All Pakistan Textile Association spokesman Mr. Feroz Gulzar while referring a letter written to the chairman Central Board regarding PSF regulation policy has said that Local PSF manufacturers are a cartel and jointly fix their prices.
They are thus able to overprice their products with the based on import parity pricing. This becomes possible primarily due to the import duty applicable on imported polyester fiber further more DTRE announced in the recent budget is not practical and is ineffective for indirect exports besides the record keeping is a daunting task in itself.
He further stated, we were unable to put our points across effectively as chairman had pointed out that if PSF is to be duty free than so could yarn, fabric and other downstream textile products.
We fully agree with chairman and clarify that cotton is a raw material and is already being imported duty free. It is our contention that so should polyester staple fibre which is also a critical raw material for the entire textile chain, Also we do not oppose import of yarn on the basis of free import and export policy which we have always supported.
Even now, all exporters are able to import their entire products duty free if they want to re-export the same. DTRE basically is not something which can benefit the textile industry as a whole. It only benefits a few mills that are of a particular vertically integrated set up.
These are primarily the large groups. The bulk of the industry cannot practically avail of this benefit. As 80 to 85% of the entire textile production is exported anyway, it is clear that charging duty on imported polyester fibre is against the basic principle of not charging duty on raw material which are going to be re-exported after processing / adding value.
The CBR applied similar logic to sales tax when it, rightly, zero rated the textile sector for sales tax. By removing import duty on polyester fibre, majority of exporters will benefit rather than just 5% which would benefit with DTRE.
The removal of Custom duty will not encourage people to import PSF. It will only help in reducing the import parity price and the local suppliers of PSF will have to reduce their price to match the import parity price.
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