New textile policy likely to exempt 11% sales tax on domestic cotton, NA told

ISLAMABAD: The government on Wednesday told the National Assembly that the US has imposed 30pc reciprocal tariffs on imports from Pakistan, which is currently suspended for 90 days while exporters are generally of the view that the tariff poses a challenge for them.

However, some exporters have expressed optimism that due to higher tariffs imposed by US on other competitor countries, it may also be an opportunity to enhance Pakistan’s exports for the US.

In a written reply to a question of Mirza Ikhtiar Baig with regard to the US tariffs, Commerce Minister Jam Muhammad Kamal stated that the US has imposed 30pc reciprocal tariffs on imports from Pakistan, which is currently suspended for 90 days. He stated that exporters are generally of the view that the tariff poses a challenge for them. However, some exporters have expressed optimism that due to higher tariffs imposed by the US on other competitor countries, it may also be an opportunity to enhance Pakistan’s exports for the US. The prime minister has constituted a Steering Committee and a working group for in-depth analysis and policy responses to the US reciprocal tariffs. Ministry of Commerce is coordinating with various ministries, departments, exporters and other stakeholders to devise the strategy to engage with US authorities in this regard. He stated that during FY2023-24, Pakistani’s exports to US were $5.3billion as compared to import of $2.2 billion with the trade surplus of $3.1 billion. Similarly, during CFY2024-25(up to March), Pakistan’s exports to US were $4.4 billion as compared to imports of $1.9 billion with the trade surplus of $2.5 billion. Pakistan’s major exports to US are garments, medical instruments, PET-bottle grade, etc. The major imports from US are cotton, iron and steel scrap, computers, petroleum products, soyabean, almonds, etc.aid.

In reply to a question of Sharmila Faroqui, Parliamentary Secretary for Commerce Zulfiqar Ali Khan told the National Assembly that the prime minister will soon announce a new textile policy, which is expected to include a proposal to exempt the 11pc sales tax currently imposed on domestic cotton production. He stated that the new textile policy will be unveiled within the next couple of months.

He said the exports of value added goods have increased by 35 percent over the last five years.