The Ministry of Textile Industry has approached the Federal Board of Revenue (FPR) for issuance of necessary Statutory Regulatory Order (SRO) to withdraw customs duty on import of textile machinery and equipment falling under the head of Pakistan Customs Tariff (PCT).
In a letter to the Chairman the Ministry has requested the Board to issue SROs for the implementation of zero rating on textile machinery, sources told Business Recorder here on Monday. In the new textile policy it was announced that import of all textile machinery will be zero rated to attract investments. Sources said that textile machinery worth $502.8 million was imported during 2007-08. Major investment was in spinning, weaving, processing and making up sectors.
According to the documents made available to Business Recorder, textile machinery worth $210.9 million was imported in 1999-2000. The next fiscal year it jumped by 75.5 percent to $370 million. In 2001-02 textile machinery imports increased by 9.9 percent and totalled $406 million. In 2002-03 imports increased by 30.7 percent to reach $531 million.
In 2003-04 imports rose by 12.4 percent and were estimated at $597.9 million and machinery worth $928.6 million was imported with an increase of 55.3 percent during 2004-05. However a decline of 17 percent in the import of textile machinery was witnessed in 2005-06 and machinery worth $771.5 million was. In 2006-07 imports declined by 35.2 percent and totalled $502 million while machinery worth $438.3 million with a decrease of 13 percent was imported during 2007-08.
Analysts argue that the growth in machinery imports, albeit a decline in recent years, shows that investment for modernisation of textile industry, which commenced four years ago, is continuing. This accounts for a rise in production capacity of cotton related products. Consequently yarn production has increased by 12 percent and cloth production by 7 percent.
Cotton textile exports grew from $9.2 billion in 2004-05 to $10.37 billion in 2005-0 and $11 billion in 2006-07, but in the last fiscal year exports of textiles fell by 2.2 percent if compared to 2007-08 ($10.78) billion.
Sources said that with the broad focus on framework of knowledge technology and value-addition improvements, the ministry of textile is striving to achieve the objectives of availability of high quality cotton, developing the entire textile value chain at par with international best practices, expanding the textile sector to produce value-added garments along with new innovative products, developing a state of the art infrastructure, augmenting investment in human resource management and enlarging our textile and clothing export.
They gave a variety of reasons for the poor state of textiles sector. Machinery and technology has not kept pace with world standards, infrastructure has been lacking, especially power, gas and clean water, available skills are deficient, high degree of fragmentation mars efficiencies, uneven growth of value-chain undermines balanced development of the sector, external restrictions such as quota and restricted access provided limited opportunities and absence of a well defined policy framework create uncertainties and promote haphazard development of the sector.
Pakistan is converting one bale of cotton into $1000, whereas neighbouring competitors are converting a bale into $4,000. In the next five years (from 2009-14) the textile policy targets this rate of conversion to double from $1000 to $2000. This will require increasing the level of exports to $25 billion by the end of the policy period, sources added.
