Duty-free import of cotton: MoC to send summary to ECC

Ministry of Commerce (MoC) is to send a summary to the Economic Coordination Committee (ECC) of the Cabinet for duty free import of cotton aimed at bridging gap between demand and supply, sources close to Commerce Advisor told Business Recorder.

This agreement, sources said, was reached between the Commerce Advisor and All Pakistan Textile Mills Association (APTMA) last week. The sources said, this year cotton crop has failed drastically and a total of less than 9 million bales are to be the final production figure. Under these circumstances, the industry requires a mammoth six million bales plus of imports to maintain even last year's production and export level. According to sources, Commerce Division will submit another summary to the ECC to allow import of cotton from Torkham border.

In November 2018, the ECC had decided to allow import of cotton for one year from Torkham border which was a big relief for the textile industry because it not only reduced the cost of imported raw material but the quality of this cotton was far superior to Pakistani cotton and could be used to produce a better yarn.

Textile industry requested many times in letters for extension in time for import of cotton from Afghanistan, Mozambique, Mali and other Central Asian countries for a period of five years to ensure smooth flow of raw material. APTMA also requested to move as summary to ECC for approval of the proposals but now custom authorities have stopped processing cotton from Torkham border. In the meantime, the Plant Protection Department (PPD) has visited Afghanistan and submitted a report clearing the imports.

Commenting about the import of yarn from Oman, the sources said, yarn imported from Oman is not of Omani origin and is most likely banned Indian yarn. The government is expected to issue necessary instructions to customs officials at Karachi for not processing any yarn import from Oman.

"Commerce will write to Customs authority to investigate the matter and block flow of Indian yarn through Oman in the country," the sources added.

Commerce Ministry has also agreed to submit the long-awaited draft long term national textile policy within a few days to the federal cabinet or lose their competitive edge given that Pakistan's exports have shown growth of 26 per cent in volume terms and are set to contribute an additional $ 2 billion to Pakistan exports.

Last month textile exports increased 8 per cent in quantitative terms; and by 4.10 per cent in value term.

There is an impression that the government is jeopardizing investment growth and an increase in quantity and value of exports through non-implementation of the agreed energy tariffs, non-availability of raw material and credit squeeze due to severe issues with the new GST refund system as well as the extremely high rate of 17 per cent GST. All these are possible only with a long term textile policy.

In reply to a question regarding rehabilitation of closed capacity, the sources said, revival of closed units for quick capacity encashment is crucial to enhance exports. Bankruptcy law shall also be introduced which is considered necessary for development and revival of textile industry.

It was decided in the meeting between APTMA and Abdul Razak Dawood that a committee will be formed to consider the cases and a proposal will be moved to make Shaukat Tareen, former Finance Minister, as Chairman of the rehabilitation committee.