ISLAMABAD, Aug 29: The federal government on Friday reduced customs duty on 13 items and converted $160 million loan to provinces under the drought emergency relief assistance (DERA) into grant.

These decisions were taken at a meeting of Economic Coordination Committee (ECC) of the cabinet, presided over by finance minister Shaukat Aziz.

Sources in the Central Board of Revenue (CBR) told Dawn that Anomaly Committee had proposed reduction of duty on 84 items but the ECC rejected the proposal and reduced duty only on 13 items. It was decided to deliberate upon other items in detail and then take a decision later.

These sources said that duty on Chromium Sulphate and Stearic acid was reduced from 25 per cent to 20 per cent while duty on Sodium Dichromate was reduced from 10 to 5 per cent. Similarly, duty on iron powder was also reduced from 10 to 5 per cent.

An official announcement said the committee also approved that the scope of clause (b) of SRO 507(1)/2003 of June 7, 2003 to be limited to only three items i.e. air-conditioning/chilling plants and humidification plants, cranes and propane storage tank/heat exchanger and gas separator.

The ECC also approved reduction in withholding tax (income tax) from 6 per cent to 3 per cent minimum on import of edible oil.

To promote import of ship scrap, the ECC also reduced the value addition from 21 per cent to 14 per cent on the ship scrap for the purposes of imposition of sales tax. This decision has been taken to promote construction industry and housing.

Similarly, sales tax has been waived on local supply of fresh, liquid and dried milk with or without addition of sugar or any other sweetening matter. Sales tax on livestock/poultry, including plant/machinery meant for processing, packaging and preservation has also been waived off in order to boost export of these items.

To mitigate the effects of drought, the meeting also approved conversion of $160 million drought emergency relief assistance loans into grants. The Planning Commission had proposed that this would provide relief to provinces and reduce their debt burden.

The Industries Minister Liaqat Ali Jatoi informed the ECC that the ministry had issued directives to the Pakistan Steel to sell steel to industrial users only which has resulted into reduction in the whole sale price of steel.

The meeting noted with concern that in spite of reduction in excise duty in cement, the benefit has not been passed on to the consumers. The Ministry of Industries informed the ECC that consumption of grey cement in 2003 increased by 11.55 per cent. Around 430,000 tons cement was exported registering an increase of over 303.97 per cent. The current capacity utilization of 68 per cent of cement industry was expected to increase to 75 per cent by the end of the current financial year.

The ECC did not agree with a proposal of the ministry of food to fix support price for rice but approved an indicative price to encourage rice production.

The indicative price of super basmati and basmati 2000 was fixed at Rs485; basmati 385 at Rs400; irri-6 at Rs215 and KS- 282, DR 82, DR 83, DR 92 and Niab irri-9 at Rs230. The ECC also recommended measures like improving productivity of rice with regard to use of improved seeds, soil management, use of gypsum, weed control, integrated management, harvesting and threshing of rice, improving quality and effective marketing.

The ECC recommended to the cabinet the establishment of dry port at Sukkur. The establishment of dry port would provide doorstep facilities to the businessmen of Upper Sindh to expand their businesses and increase their exports.

The ECC directed the CBR to make a presentation in the next meeting on custom reforms and functioning of dry ports.

The ECC expressed satisfaction over sufficient stocks of wheat, edible oil, oil, fertilizer and sugar. It noted that prices of essential items remained stable and inflation level was under control.