KARACHI, Sept 2: Export contracts worth millions of dollars for polyester staple fibre (PSF), and polyester products could not be met because of the high customs duty on the import of raw material (PTA/MEG) , owing to the sovereign guarantee given to local manufacturers of the PTA, exporters said on Wednesday.
Pakistan's 10 million spindles are currently producing about 600,000 tons of the PSF, whereas India too, is evenly producing but through the operation of 28 million spindles.
Exporters have said that there exist a big scope for the export of the PSF and its products like the P/C yarn, and fabrics, adding, we daily receive enquiries for thousands of tons but manufacturers show reluctance because of the tariff protection given to local raw material producers of the PTA," asserted another exporter.
The Chairman, Export Sub-Committee of the Karachi Chamber of Commerce and Industry (KCCI), Iqbal Mangrani told Dawn that the government should enhance the duty drawback on the PSF export to cover the increased price of the PTA/MEG (which has jumped by over 50 per cent at the outset of 2004).
He further suggested reduction in the import duty on all components which will encourage the local PSF manufacturers to run on 100 per cent capacity. This, he added, will go a long way in helping them export the PSF at competitive price, and enable the spinning and weaving industry face global competition.
Recently, an Indian delegation of the Synthetic and Rayon Textile Export Promotion Council (SRTEPC) visited Pakistan and met the members of various textile associations and the KCCI.
The delegates while stressing upon the need to develop direct trade links also showed interest in enhancing trade ties between the synthetic textile industry of the two countries. The Indian delegation leader, Prem Malik suggested that India and Pakistan should join hands to face the WTO challenges and instead of competing should assist each other.
Another delegate V.K. Ladia, and the Deputy Chairman of the Indian Cotton Mills Federation after visiting some leading PSF producers expressed surprise over the quantum of the PSF production in Pakistan which is equal to the Indian.
Delegation members showed interest in importing the PSF from Pakistan by road which, according to them, will save substantial sea freight when the same is imported from the Far Eastern countries. They found Pakistan's PSF quality of the global standard and production facilities advanced than in the developed countries.
There is a big scope for export of the PSF not only to India but also to other Far Eastern countries from where enquiries for thousands of tons are rushing in daily but local manufacturers hesitate to enter into commitments because of the tariff protection given to its raw material producers i.e, the PTA up to 15 per cent.
The admissible duty drawback on its export is not sufficient to match local and international prices, and due to the complicated duty drawback system manufacturers don't want to export the PSF, Iqbal Mangrani said.
We suggest the government to get rid of the sovereign guarantee given to the PTA producers by compensating them suitably which will increase the export of polyester products manifold. Or else, the entire polyester industry will continue to suffer till 2008.