The Federation of Pakistan Chambers of Commerce & Industry (FPCCI) recently urged the government to waive the 37 per cent tax on partially-oriented yarn (POY 5402.4600), the basic raw material for the textile industry and small and medium enterprises, so that investors can be encouraged to set up draw textured yarn (DTY) manufacturing plants.
Local production can meet the demand for raw materials of the domestic industry, chairman of FPCCI standing committee on imports Khawar Noorani said. He expressed deep concern over the equal tax rate on imported POY and DTY. The government imposes 11 per cent customs duty, 2 per cent additional customs duty, 2 per cent income tax, 2.5 per cent regulatory duty, 17 per cent sales tax and 3 per cent additional sales tax on POY imports, which is 37 per cent of the total tax, while the tax rate on DTY is also same and this is unfair as the duty on POY is less all over the world, he was quoted as saying by Pakistani media reports.
Only two plants in the country directly produce 20 per cent DTY from PTA and MEG, while DTY can also be produce from POY (pre-oriented yarn), and that’s why industries have to depend on imported DTY for 80 per cent of their requirements, he said.
The two local producers get advance payments from factories and are not in a position to provide DTY yarn due to capacity issue, and as world prices are going downward, they are not making complete range of polyester raw materials.