LAHORE – The Ministry of Textile has proposed rationalisation of textile chain and opposed a decline in all tariffs to 10 percent, Pakistan Today has learnt. The Ministry believed that anomalies in the textile and clothing tariff structure exist, which point to the fact that government must understand the importance of greater tariff protection.
Documents reveal that the government will aim to bring all tariffs down to a maximum rate of 10 percent.
Contrarily, even developed economies have higher tariff rates and slabs for textiles and clothing sectors. “This drastic change is not viable for the present economic situation and industry of the country,” the Ministry of Textile said. It further stated that the government should look for a gradual shift towards lower tariff; however higher cuts of effective protective rates on value added sector will be seen if principles of cascading were not followed.
The Ministry claimed that the government must understand the textile value chain, as the sector includes a strong spinning industry, in addition to fragmented low technology weaving sector. The high-end processing sector can only process around half of the production in the domestic market. However, an under-developed stitching sector can easily triple our exports, with the help of upstream industry’s domestic production and provision of massive employment opportunities. “Unlike Bangladesh, Pakistan has a strong upstream industry and huge cotton production. To increase investment in the downstream industry and for better utilisation of local raw materials production and semi-processed goods, higher benefits to the downstream industry are necessary,” the Ministry observed. It underlined that the best option is, thereby, to rationalise the tariff through the cascading principles, which provides higher protection and better margins to the underdeveloped downstream industry.
The Ministry, citing examples of the spinning stage in Pakistan, said that the sector is strong and carries a major chunk of the exports share in the world. However, other sectors are not competent enough; hence, tariff regime for all fibers will not be viable. Domestic section of the fabric market was protected by 25 percent tariff but imports over this tariff were only equivalent to about one percent of the market. Imports of final products, over the 25 percent tariff, were negligible, suggesting that the tariff was prohibitive. Citing examples of developed countries like USA and EU, the Ministry asserted that these countries have variant and effective protective rates.
