ISLAMABAD, May 25: The government is expected to rationalise tariff and duty drawbacks on textile products in the federal budget 2007-08 to enhance textile exports by at least 20 per cent next year.
This means the textile exports should be in the range of $15-16 billion next year compared to the $12.5 billion expected by the end of current year.
Minister for Textiles Mushtaq Ali Cheema confirmed that duty drawback rates for textile exports would be rationalised in the coming budget along with tariff rationalisation. For example, duty on polyester staple was currently at 6.5 per cent, 155 per cent on caustic soda and 15 per cent on screen would be rationalised and updated.
He said the government’s recent decision to allow import of long staple cotton from India through land routes would also be helpful in meeting cotton shortfall and enhance exports. In addition, a part of about four million bales of surplus Uzbek cotton that was lying at Iran’s Bandar Abbas port could also be imported through the Torkham and Chaman borders. Pakistan was currently facing a shortage of 3-3.5 million bales which could be met through land route imports from India and Uzbekistan.
The minister said the textile industry would be provided with a level-playing field through zero rated exports in the coming budget, adding that the industry was at present 30 per cent under-utilised and could not earn profits unless interest payments were relaxed. He said the industry would take two-three years to use its full capacity through various measures, including swapping of their expensive loans with inexpensive long-term loans, zero rating and import of cotton.
He said one reason why the textile industry in Pakistan could not reach its full capacity was that the textile industry units in the US and Europe were not closing down with the anticipated pace. However, substantial investments of $6 billion that the industry made in recent years had given us confidence that exports could increase by 20-25 per cent next year, he said.
He lamented that Pakistan still exported only about $1.5 billion cotton yarn that was not only strengthening its competitors but also resulting in low cost exports.
