The Cabinet Committee on Textile here on Wednesday decided to eliminate 5 percent customs duty on import of cotton yarn falling under Chapter 52 of the Harmonised Tariff Schedule. Status quo would be maintained on export of cotton yarn, and it has been decided that the Cabinet Committee would keep yarn exports under review and would only take corrective measures if exports crossed the level of 50 million kg per month.
Federal Minister for Textile Industry, Farooq Saeed Khan, presided over the 2nd meeting of the Cabinet Committee on Textile to review production, prices and domestic availability of cotton yarn. Secretary for Textile Industry Dr Waqar Masood Khan briefed the meeting on production trends, exports and availability of yarn for the value-added export sector.
After in-depth deliberations, in which all factors were examined, it was decided that corrective measures were required to be taken urgently to provide level playing field to all stakeholders in the textiles chain and needs of all should be fulfilled in a competitive manner.
The Cabinet Committee, therefore, took the following decision: Customs duty on import of cotton yarn, falling under Chapter 52 of the Harmonised Tariff Schedule, will be removed with immediate effect. The Cabinet Committee will keep yarn exports under review and may take corrective measures if exports cross the level of 50 million kg per month.
Exports of yarn will be allowed only against letters of credit (L/Cs) and advance cash received through normal banking channels and following registration of contracts with the Trade Development Authority of Pakistan (TDAP). It has been decided that he next meeting of the Committee will be held on 8th January 2010 to review the situation.
The Committee was informed that the quantum of cotton yarn exports from Pakistan had declined to 59,000 tons in November compared to 73,000 tons in October, easing prices for the local industry and providing official agencies a sufficient room to continue with a liberalised trade regime. The ministerial committee discussed the availability of yarn for local buyers in the face of surging exports.
Some quarters in the textile industry were pushing the government to ban yarn export, or at least tax it, after prices surged to an all time high level in late October. But officials, both at textile and agriculture ministries, continued to maintain that any such move would deprive cotton growers of an opportunity to get a reasonable return by exposing to a exploitation by industrialists.
Official sources at the MINTAX told the meeting that figures compiled by Trade Development Authority of Pakistan (TDAP) had suggested a ''substantial'' decrease in exports during the month of November. Quoting from the TDAP''s report, the official said that about 300,000 tons of yarn had been sold to buyers outside Pakistan during the period of past five months between July and November.
The meeting was attended by Nazar Muhammad Gondal, Federal Minister for Food & Agriculture, Hina Rabani Khar, State Minister for Finance, Zafar Mahmood, Secretary, Ministry of Commerce, Abdul Ghaffar Soomro, Secretary, Industries & Production, Muhammad Zia-ur-Rehman, Secretary, Food & Agriculture, Muhammad Saleem Khan, Secretary, Investment, Manzar Hayat, Secretary, Industries Government of Punjab, Dr S.M. Younus, Member, Planning Commission, Munir Qureshi, Member Customs, Federal Board of Revenue, Ahmed Hussain, Joint Secretary, Ministry of Finance, Tahir Hussain, Commissioner, Faisalabad and Mohib Ullah Shah, CE, TDAP and officers of Ministry of Textile Industry participated in the meeting.