Textile machinery allowed from India: Ministry issues SRO
By Sabihuudin Ghausi
KARACHI, Nov 27: The Pakistan government has allowed the import of most of the textile machinery from India under a recently extended positive list of importable items. A notification to this effect has been issued by the commerce ministry this week, which has been welcomed and termed “long overdue” to quote President of Karachi Chamber of Commerce and Industry Majyd Aziz.
Under this recent order Pakistan has enlarged positive list of importable items from India to 1,841 tariff lines that cover 1,074 products. Before this enlargement, Pakistan’s positive list included 1,525 tariff lines that covered 774 products.
Pakistan is refusing to give India the “Most Favoured Nation” (MFN) status and it trades on the basis of a positive list that is under constant review and has been extended continuously during last more than two decades.
Trade with India was formalised way back in 1986 when the Indian commerce minister visited Pakistan and signed a protocol with late Dr Mahbul Haq, the then Pakistan’s commerce minister.
A significant omission from the positive list of importable items from India is ring frames and textile dyeing and processing machinery.
The decision comes in the wake of falling imports of textile machinery during last few months and leaders of trade and industry now expect that Pakistan’s textile industry is bound to get a boost.
According to the textile industry leaders Pakistan now imports textile machinery from USA, Japan, Germany, Switzerland and other Western countries, which are costlier because of high cost of capital goods, freight and above all the consultants’ fee charged to install this machinery and equipment in Pakistan.
“Most of the Western countries companies--that supply textile machinery to Pakistan--have joint venture projects in India or have given franchise rights and licences to Indian companies,” Mirza Ikhtiar Baig, a former chairman of Site Association of Industry (SAI) told Dawn. He said the Indian-made textile machinery under a licence or franchise from a Western company or of a joint venture will be a lot cheaper.
Installation of the Indian machinery and its periodical maintenance and repair in Pakistan will also be relatively less costly because the fee of Indian consultants is not as high as those from the Western countries and Japan. “Above all the language and culture is by and large the same and, therefore, no problem in communication,” Mr Baig said.
He insists that the textile machinery and equipment should be allowed only from those Indian companies that have licensing arrangement, have franchise rights or are in joint ventures. “Ring frames are available from China that is now the main supplier to the textile producing countries,” he added.
The KCCI president expects a build-up in imports from India that will tilt the trade balance towards India in the short-run but will eventually contribute in improving Pakistan’s global trade balance in the long-run. Many textile companies did import Indian textile machinery through a circular trade of trans-shipment from Dubai, Singapore or Hong Kong, which obviously was a relatively expensive affair.
In addition to textile machinery, Majyd Aziz suggests import of other category of machinery also from India, which, he is convinced, will give a boost to Pakistan’s industry. The Import of textile machinery is showing a declining trend for last several months and after attaining a peak of $928.6 million in 2004-05 came down to $771.46 million in 2005-06. Textile machinery imports came down by more than 33 per cent on year-to-year basis in last four months.
Exports of textile products are also under tremendous pressure and in July to October 2006 are down by about 10 per cent.
