KARACHI, June 28: The increase in import duty on textile plant and machinery for spinning, weaving and finishing industry in the 2002-2003 budget by five per cent will adversely affect the Balancing, Modernization and Renovation (BMR) in the textile sector.

“The textile industry will not undertake BMR in future due to increase in import duty,” chairman All Pakistan Textile Mills Association (Aptma), Sindh and Balochistan Zone, Mushtaq Vohra told Dawn on Friday.

He said the pace of BMR has been going smooth ahead of budget, and our members were expecting further rationalization in the import duties on machinery.

“This will contribute to retarding the growth as well as affect the BMR,” he said adding more than 300 members have undertaken BMR, costing over $500 million in the last one year. The industry has been expanding rapidly to increase the export and achieve the targets of textile vision 2005.

Aptma chief also provided a list of around 23 textile plant and machinery showing pre-budget and post-budget comparative rates of duty.

Textile mills have been investing huge amount on BMR aimed at improving the quality of the products, fetching better export price and improving efficiency of the mills in order to compete in the world markets with arch rivals like India, China and Japan.

Vohra said the new budget has also withdrawn the facility of initial depreciation allowance on second hand plant and machinery. After withdrawal of this facility, leasing companies will charge considerably higher rent for lease of second hand plant and equipment. As such, he added, the cost of proposed BMR will become more expensive thereby retarding expansion in the textile industry.

He urged the government to maintain the existing rate of five per cent duty on plants and machinery as per pre-budget position. APTMA has also proposed that machinery used for textile dyeing and finishing (which is value-added sector) should be zero-rated to provide incentive to this sector.

Besides the BMR issue, Aptma has found around a dozen fiscal anomalies in the 2002-2003 budget, he said.

Aptma chief said that no reduction in customs duty of 20 per cent has been made for dyes. He proposed that five per cent duty is more advisable. The customs duty on caustic soda liquid has been increased to Rs7,000 per ton from Rs6,000 per ton while duty on caustic soda solid has been cut to 25 per cent from 30 per cent. The duty on solid and liquid caustic sodas should be equal and fixed at five per cent.

In the budget, import duty on the basic raw material used by the industry has been cut by 5 per cent but import duty on the product manufactured by the industry has been reduced by 10 per cent, thus creating an anomaly. Raw materials have been subjected to higher duties at 20 per cent whereas the end product has been subjected to lower rate of duty at 10 per cent.

The association also proposed to cut the customs duty on viscose filament yarn to 5 per cent as the duty has been increased to 20 per cent from 10 per cent.

Textile millers also called for waiving the requirement of installation-cum-production certificate. Tariff on compressors and air dryers should be brought to 5 per cent, they proposed.