ISLAMABAD, June 1: The federal government has finalized a number of proposals for the budget 2005-06, which include two separate comprehensive packages for the development of textile sector and rationalization of duty structure for auto industry. Finance ministry sources told Dawn on Wednesday that under “no-duty-no-drawback”, the whole of textile chain — weaving, spinning and ginning, etc. — would be brought out of the general Sales Tax (GST) net.
Similarly, customs duty on the import of all types of raw materials for textile sector has been proposed to be removed. These sources said in principle a decision has been taken to reduce customs duty on a number of items to discourage smuggling into the country. In this connection, the CBR would be reducing duties on auto-parts of different vehicles and electronics including tyres, batteries, ball-bearings, spark plugs, television sets and their various parts and a number of other electronic parts.
In this way, the government would reduce duties on import of tyres specially those of trucks, buses and tractors, which are smuggled into the country from across the Indian borders.
These sources said a tax relief package would be introduced for the auto industry which would also benefit the customers. The relief to the customers would be provided through reduction in customs duties on vehicles import. However, the CBR was still working on a set of proposals aimed at reducing the rate of customs duties on vehicles.
Moreover, the government was also considering a proposal to allow import of second-hand auto-parts to put an end to their illegal import. The sources said the central excise duty on cigarettes has been proposed to be increased but it would be converted into the GST mode. At present, the government was charging both the CED and GST on cigarettes.
The sources said the main thrust of the package for auto industry was to remove a clear imbalance in this sector, which was more tilted towards manufacturers than their users. However, an effort would be made to provide vehicles to the customers at reasonable rates irrespective of the fact that they are imported or assembled locally without destabilizing the local auto industry, which has still to go a long way to reach a maturity stage and attain self-sustaining environment.
The main focus of this exercise was to compel the local industry to achieve complete deletion programme in real sense instead of allowing it to continue importing various parts but showing them as if these were manufactured locally.
