ISLAMABAD: The government has withdrawn customs, regulatory and additional customs duties on more than 163 tariff lines to increase the share of man-made fibres (MMF) for better per-unit prices in the international markets.

The exemptions on these tariff lines were approved in the National Tariff Policy Board in a meeting held on Aug 24 and will have a total revenue impact of Rs532.875 million per annum.

The Economic Coordination Committee of the Cabinet formally approved the proposal on Wednesday and directed Federal Board of Revenue to implement it.

As per the details, the government has withdrawn cumulative 22.5 per cent duties — customs duty (CD), regulatory duty (RD) and additional customs duty (ACD) on 37 tariff lines; 24pc on 14 lines; 20pc on 25; 15pc on 16 tariff lines; 27pc on three lines; 13pc on 29; and 5pc on 38 tariff lines.

An official announcement of the commerce ministry said the duties were withdrawn on selected HS codes of textile sector, including fibers, yarns and fabrics of nylon, viscose, acrylic, rayon, silk, wool and vegetable based fibers like hemp etc.

The rationalisation has been done with an objective of increasing the share of MMF for better per-unit prices in the international markets, product diversification and, most importantly, value addition in the textile sector.

Commerce Adviser Abdul Razak Dawood said that this is in pursuance of the policy of Ministry of Commerce (MoC) for cost reduction by reducing the duties, including ACDs and RDs, on raw materials as well as intermediaries. “This is also an essential part of promoting industrialisation under ‘Make in Pakistan’, and ensuring ‘export-led growth’ in the country,” he said.

The adviser said notification will be issued after ratification by the Cabinet. This decision will enable Pakistani exporters to widen their product range, capture more of the synthetic market and improve competitiveness. “The MoC will now do the same in other sectors like leather, engineering, chemicals, pharma and food etc”, he further noted.

Under the review exercise being conducted at the MoC, as per the three-year Tariff Rationalisation Plan, the National Tariff Commission (NTC) has initiated studies of different sectors including textile.

During the analysis, it was observed that textile sector in Pakistan is using 70pc cotton and 30pc MMF in manufacturing of goods, which is opposite to the general trend among the top exporting countries. This has a direct impact on the value addition, productivity and per-unit price of our textile products in the international markets. Therefore, after due consideration, as an initial step, tariffs have been revised for some of the items.

However, under the three-year plan, other sectors, including leather, engineering, pharmaceuticals, chemicals and food processing etc are also being reviewed by the NTC, and tariffs will be rationalised accordingly.

The first phase of tariff rationalisation was completed and implemented through Finance Act 2020-21 wherein import tariff was reduced and adjusted on more than 2000 tariff lines.

The local industry is expected to have a yearly benefit of Rs20 billion on the import of raw material and intermediate goods.

Published in Dawn, September 24th, 2020