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Pakistan’s 10% Import Duty on Indian Cotton Yarn Could Bankrupt Apparel Sector

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Pakistan cotton yarn

Photo courtesy A Hume Country Clothing

Following Pakistan’s recently announced 10 percent tariff on imports of Indian cotton yarn, Islamabad Chamber of Small Traders Patron Shahid Rasheed Butt on Friday said the decision would have an adverse effect on the value-added textile industry.

According to local media reports, Butt said the apparel and home textiles sectors—which rely on Indian yarn—will suffer as the price of goods goes up to counter the rising cost of doing business, thus compromising Pakistan’s position in the international market.

The regulatory duty, which comes into effect on November 1, was revealed more than a week ago by Finance Minister Ishaq Dar after a series of meetings with the All Pakistan Textile Mills Association (APTMA) and representatives of the value-added sectors at the Federal Board of Revenue (FBR) headquarters in Islamabad.

Butt said the decision will only benefit domestic spinning mills, however, easing tension with the APTMA, which closed its 400 member spinning mills earlier this month in protest against the government for increasing the power tariff and providing unfair advantages to Indian textile producers.

He said that value-added sectors would lose market share to Bangladesh, Sri Lanka, China, Vietnam and India, which could result in the bankruptcy of several units.

His comments echoed those of Pakistan Readymade Garments Manufacturers and Exporters Associations (PRGMEA) Chairman Irfan Ali, who called the move “a death warrant.”

The new duty isn’t the only factor working against Pakistan’s apparel industry. Earlier this year, the Institute for Policy Reforms (IPR) cautioned that frequent energy shortages, the rising cost of power and raw materials and an overvalued rupee could cause the country to lose an even greater share of the global garment market.

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