LAHORE, June 17: The federal government’s decision to remove the import of man-made, synthetic fibres, especially polyester staple fibre (PSF), from the Duty and Tax Remission for Export (DTRE) scheme will adversely impact upon the export of blended yarn, as the product has suddenly become 6.5 per cent costlier than its international price.

Textile industry sources told Dawn on Saturday that the decision would affect the local industry involved in the production of blended yarn and blended yarn based textile products seriously.

The government had included the import of PSF and other synthetic fibres used for manufacturing blended yarn and products based on it in the DTRE scheme last year, with a view to increasing its exports. Besides, the import duty on man-made fibres was reduced from a hefty 20 per cent to 6.5 per cent for local consumption.

The measures were taken by the government in view of long standing demand of the industry to rationalize tariffs on products used by textile exporters. The government had also announced to make the entire textile industry exports `zero rated’. The industry sources say the government decision to remove import of man-made fibres for export from the DTRE scheme has created an anomaly, and its claims of making the textile exports zero rated had fallen apart. “Export of blended yarn or products based on it is no longer zero rated because even the exporters will have to pay un-refundable 6.5 per cent duty on their imports for exports,” the industry sources say.

“This means that now we are 6.5 per cent more expensive than our regional competitors like Thailand and India. But the higher cost is not the only issue here. This also means that we will lose the hard won market for blended yarn. The buyers now don’t consider us a serious player in this field because of sudden and unexplained policy changes, and won’t come here again,” the sources say.

Blended yarn exporters have been importing around 13,200-18,000 tons of PSF and other man-made fibres of various specifications per annum under the DTRE for making products for export, which is around 2.5-3 per cent of the total local production that in no way damaged the local production of synthetic fibres. Another 42,000-48,000 tons of PSF and other synthetic fibres are imported for local consumption. Pakistan’s blended yarn exports stand at $100 million a year.

The blended yarn exporters admit that the inclusion of import of PSF and other fibres for export in the DTRE scheme had not pushed up export of blended yarn in the last one year. However, they contend, this single measure had accorded a special position in the world market as a serious processor/converter of PSF and other specialty and different fibres, and the “buyers had started to take us as serious players in this field because of our advantages”. “There is vast scope of increasing export of blended yarn from Pakistan and we were expecting the favourable government decision to give a big boost to this industry. But the reversal of the facility after just one year under the pressure of powerful PSF manufacturing lobby has taken away our comparative advantage from us. Now the buyers will maintain us at the minimal share,” they insist.

The exporters also admit that the imported man-made fibres still cost them less than the locally manufactured fibres even after the payment of 6.5 per cent duty. But, they say, its exclusion from the DTRE scheme has made its export unviable by increasing the cost of production for export. They say they would now be unable to process export orders. They blended yarn manufacturers and exporters have called upon the government to revoke its decision of excluding import of PSF from the DTRE scheme and re-include it in the scheme so that Pakistan could continue to make inroads into this niche market and secure its rightful share from the global market.