The Economic Coordination Committee of the Cabinet, in the meeting held today, approved removal of Additional Customs Duties (ACDs) and Regulatory Duties (RDs) on selected HS Codes of textile sector, including fibers, yarns and fabrics of Nylon, Viscose, Acrylic, Rayon, Silk, Wool and vegetable based fibers like Hemp etc. The summary was moved by Ministry of Commerce, after approval of the National Tariff Policy Board in its meeting held on August 24, 2020.
The rationalization has been done with an objective of increasing the share of MMF (Man Made Fibers) for better per unit prices in the international markets, product diversification and, most importantly, value addition in our textile sector.
This is in pursuance of the policy of Ministry of Commerce for cost reduction by reducing the duties, including ACDs and RDs, on raw materials as well as intermediaries. This is also an essential part of promoting industrialization under ‘Make in Pakistan’, and ensuring ‘export led growth’ in the country.
Under the review exercise being conducted at MOC, as per the three year Tariff Rationalization Plan, the National Tariff Commission has initiated studies of different sectors including textile sector. During the analysis, it was observed that textile sector in Pakistan is using 70% Cotton and 30% MMF in manufacturing of textile goods, which is opposite to the general trend among the top exporting countries in textile sector. This has a direct impact on the value addition, productivity and per unit price of our textile products in the international markets. Therefore, after due consideration, as an initial step, tariffs have been revised for some of the items.
However, under the three year plan, other sectors, including leather, engineering, pharmaceuticals, chemicals and food processing etc, are also being reviewed by the NTC, and tariffs will be rationalized accordingly.
The first phase of tariff rationalization was completed and implemented through Finance Act, 2020-21 wherein import tariff was reduced and adjusted on more than 2000 Tariff Lines. The local industry is expected to have a yearly benefit of Rs. 20 billion on the import of raw material and intermediate goods.
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