Govt mulls slashing duties on 515 raw material imports to boost exports

KARACHI: Government is mulling to reduce customs and regulatory duties on import of more than 500 raw materials used by export-oriented industry in the upcoming budget to boost exports, a commerce ministry’s statement said on Thursday.

“While a comprehensive tariff policy for industrial expansion including the medium and long-term measures is being developed, in the short term the immediate rationalisation of tariff is being considered on 515 tariff lines,” the statement said, inviting feedback on the proposed tariff structure from all the stakeholders by March 28.

Commerce division is currently working on the formulation of a five-year strategic trade policy framework 2018-23 in consultation with the stakeholders. “One of the key enablers identified for increasing the competitiveness of the export sector is the rationalisation of tariffs on critical inputs of the export-oriented industry,” the statement added.

Mohammad Ashraf, director general of commerce ministry said the government slashed duties on some imported raw materials used by export-oriented industry in the budget for the current fiscal year, “but the (current) proposal to rationalise tariffs was made for almost all the critical inputs”.

“It took three months for us to devise a list of the critical inputs,” Ashraf said, referring to difficulties in gleaning data.

Commerce division and National Tariff Commission undertook the exercise to identify the inputs/raw materials of the export-oriented products and the tariff structure of these inputs. “The objective is to rationalise the tariffs in order to make exports more competitive and facilitate participation of local manufacturers, including SMEs (small and medium enterprises), in global and regional value chains,” the statement said.

The government departments identified tariff lines, which are being considered for revision of tariff in the budget for the fiscal year of 2019 to bring positive improvement in the tariff structure.

“The proposed tariff rationalisation will improve the competitiveness of the leading export sectors including textiles, apparel, leather, spices, chemical products, plastics and articles thereof, iron and steel,” the statement added.

Jawed Bilwani, chairman of Pakistan Apparel Forum, representing four textile trade associations said the commerce ministry is expected to hold a meeting by the end of the current month to discuss trade issues and proposed tariffs with businessmen.

Bilwani said government may face opposition on tariff reduction from chemical manufacturers if it slashes customs and regulatory duties on dye and chemical imports.

Yet, tariff rationalisation is likely to play an instrumental role in rescuing sagging exports.

Though exports are showing an upward trend, they are still not enough to narrow the widening trade deficit, battered by swelling imports that soared 17.1 percent to $39.1 billion in the first eight months of the current fiscal year of 2018.

Textile exports, which accounted for more than 60 percent of the country’s total exports, rose 7.2 percent to $8.79 billion in the July-February period.

An official said ministry of commerce’s proposal to rationalise duties on import of raw materials is likely to cut tax revenue collection by Rs15 to 20 billion, “but the proposed cut in the upcoming budget will improve local industry’s efficiency”.