Traders ask govt to allow yarn imports to bridge shortfall

Supply gap hovers at 75pc

KARACHI: Traders on Thursday urged the government to allow yarn imports from all markets across the world to meet the three-fourth requirements of the local weaving and knitting industry.  

“Fabric imports from any part of the world should be allowed under legal channel of import, including letter of credit or documents against payments because the goods payments via banking channels can save the local downstream industry,” said Muhammad Usman, central chairman of Pakistan Yarn Merchants’ Association (PYMA). 

This will also solve the conflict over the regulatory duty on polyester filament yarn.

Usman, however, asked the government to put the fabric import from Dubai on the negative list. He said no weaving/knitting factories exist in Dubai. “The Indian origin fabric is routed through Dubai, causing severe losses to local industries,” he said.

PYMA chairman said local makers of polyester filament yarn can only meet 25 percent of the downstream industry’s demand, while remaining 75 percent requirement is met through imported yarn. 

Currently, the National Tariff Commission is investigating into the losses caused by yarn dumping. 

Usman said local yarn manufacturers are persuading the government to impose regulatory duty on the import, “which would result in bringing the weaving and knitting industry on the verge of complete collapse.” 

“This will also increase the cost of yarn and fabric, thus making the entire downstream industry uncompetitive,” he added. “The results would be disastrous for the exports, which are already suffering on account of high energy costs.” 

The yarn dealer alleged that local manufacturers are attempting to create monopoly to gain short-term benefits, “at the expense of huge large downstream sector, which employs millions of people and is the back bone of the economy.” He said an anti-dumping duty of up to 18 percent was imposed on imported filament yarn from Thailand, Malaysia, Korea and Indonesia in 2005.

At that time, a total of 17 local yarn manufacturers were operating in the country. 

“During the last more than eight years since the imposition of anti-dumping duty, the number of local manufacturers has come down to just four units,” he added. 

Usman said the long-term solution for dealing with this serious issue is to modernise and upgrade plants of local manufacturers, besides enhancing their capacity to achieve economies of scale. “The regulatory duty is not the right solution,” he added.  

PYMA chief further said the government envisioned textile package in 2005. At that time, all the stakeholders agreed that in order to bring fabric trade under legal umbrella, the maximum duty on fabric should not exceed 15 percent. Hence, the duty on yarn was fixed at seven percent. “But over the years, the duty on yarn has escalated to 11 percent without any reason, causing distortions and making raw material for the downstream industry more expensive,” he said. “We suggest that yarn duty should be brought down to nine percent to give benefits to weaving and knitting industry.”