ISLAMABAD, Feb 17: The Pakistan Jute Mills Association (PJMA) has urged the government to impose 25 per cent regulatory duty on import of jute goods in order to provide immediate protection to the local industry.

In a letter to the commerce minister, a copy of which was made available to Dawn here on Tuesday, PJMA vice-chairman Muhammad Jamil Hussain said the government should take immediate steps to prevent the industry from total collapse.

He said the duty on import of jute goods was reduced from 35 per cent to 25 per cent in 2002. Moreover, the consistent rollback of the tariff from 55 per cent in 1999 to 25 per cent in 2002 had exposed the local jute industry to threat of cheap subsidized goods available in Bangladesh. He also urged the government to allow import of spare parts for jute industry from India.

He pointed out that the tariff line for sacking was 6305.1000, which was not bound yet by the government.

The ECC has decided that the duty will be bound by 70 per cent on jute goods. The total duty of proposed 50 per cent following imposition of 25 per cent regulatory duty will be much less than the bound rate, he added.

Mr Hussain said the domestic industry had the capacity to produce more than 160,000 tons per annum which was sufficient to meet the demand of jute goods in the country - 95,486 tons in 2003 leaving substantial balance available for export also. At present utilization of capacity was low at 60 per cent.

The capacity utilization of seven jute mills operating in the country was more than 80 per cent.

He urged the government to allow five per cent export market assistance on export of jute goods, which he believed, would further boost its export and compete with those of Bangladesh, which was paying five per cent cash subsidy to the exporters of jute goods.

The Bangladesh Jute Mills Corporation (BJMC), which is run by the state and produces 50 per cent of the total production of jute goods in Bangladesh, is incurring a loss of Rs4.05 billion per annum.

Citing an example, Mr Hussain said even India had allowed export market assistance and duty entitlement pass book on export of jute goods since 2002. The duty on raw materials was reduced from 10 per cent to five per cent during the year 2002.

The effective rate of duty on raw material for Saarc countries was reduced from 7.5 per cent to 3.5 per cent, which was subsequently further reduced to zero percent for Saarc countries.

These measures, he said, resulted in increase in production of jute by 17 per cent in one year. The production of jute goods in the country increased to 95,485 tons in the year 2002-03 from 81,656 tons in 2001-02. During the current fiscal year, the production was expected to increase further by more than 15 per cent.

He was of the opinion that these measures would provide a level-playing field to the domestic jute industry, boost the export earnings, generate employment and greatly help the industry utilize idle capacity that would financially strengthen the industry.