ISLAMABAD, Oct 8: The National Tariff Commission here on Tuesday deferred a decision on the request of Chemi-Colour for increase in customs duty on imported viscose rayon staple fibre to 25pc for a period of three-and-a-half years.

The applicant firm, the NTC was informed at a public hearing, had established the viscose fibre plant with a capacity of 10,000 tons per annum at Nawabshah. The first in Pakistan, it will use only indigenous materials, including cotton linter, the basic substance, and meet requirements of the local industry.

Dr Faizullah Khilji, chairman of NTC, presided over the public hearing which was also attended by Usmani Ghani, chairman of Chemi-Colour and Shahid Amin, executive director of Ibrahim Fibre.

According to Mr Ghani, the idea of establishing the plant was conceived in 1996 when the tariff on imported viscose fibre was 35pc. As the plant prepared to start production next December, however, the government reduced the tariff to 5pc. At this rate, the plant could not survive, he contended.

Nevertheless, Aptma and Ibrahim Fibres opposed the move. Raise in tariff on imported viscose fibre would increase the local cost of polyester fibre of which viscose fibre was one of the ingredients, rendering products uncompetitive in foreign markets, they contended.

The representative of Chemi-Colour contended that viscose fibre constituted only a meagre part of the polyester fibre. The fears of increase in tariff on it were, therefore, unwarranted.

He also pointed out that the plant would utilize cotton linter, a waste product of cotton, which would be put to productive use for the first time in the history of Pakistan. Moreover, he said, the protection was sought only for the initial period during which the plant would get rid of its liabilities. After that, its financial costs would diminish, thus doing away with the need of any protection, the company asserted.

The company also planned to expand the production for entering the export market in the foreseeable future, he added.

The NTC chairman said the government could not raise the bound tariff above 10pc under WTO agreements. The government was also prevented from doing so under the conditionalities imposed by the IMF, he added.

According to the data provided by the company, he said, the company might not break even with 25pc duty on imported fibre due to high financial cost.

The only remedy the Commission could recommend to the government was a reduction in import duty on caustic soda, one of the main ingredients of viscose fibre, he said.

It was, therefore, decided that Chemi-Colour would submit a proper proposal to the Commission for relief in tariff through reduced duty on caustic soda.