Pakistan may impose a regulatory duty on the import of filament yarn. The aim apparently is to give protection to local manufacturers and discourage imports.
Yarn merchants say yarn is a raw material for the textile sector and discouraging imports will increase the cost of production.Cotton has been replaced with yarn across the world and most of Pakistan’s textile industry depends on imported yarn.
About 5,00,000 power looms and knitting machines use yarn as a raw material for manufacturing textile products. Commercial importers also import yarn for consumption by such manufacturers. Demand for yarn for local consumption stands at approximately 4,50,000 tons a year of which 3,50,000 tons are imported, which shows a gap of 78 percent. Yarn demand cannot be fulfilled in any way through local supplies, which raises questions over the motive behind imposing the regulatory duty to discourage imports.
Pakistan’s yarn manufacturers still use outdated machines, which are not energy efficient. Such energy losses are built into yarn prices.Textile products produced from imported yarn are mostly used by the ordinary people due to their affordability.
The duty imposition is said to directly impact the inflation reading and further worsen the situation. On the other hand, if yarn manufacturers also increase prices in line with the landed cost of imported yarn this will, in turn, raise the cost of finished textile products.
