Textile mills in Pakistan want an increase in regulatory duty on the import of spun yarn and manmade fiber from five to ten per cent.

The justification is that import of raw material for yarn has become exorbitant due to higher duties as opposed to import of finished product. Pakistan imposes a 11 to 20 per cent duty on raw material for the textile sector. The duty on finished products stands at five per cent.

The cascading duties are being impacted by free trade agreements signed with regional countries.

Previously duties on raw material were lower compared to finished products and now raw materials are attracting more duty than the finished goods. The duty on raw material is higher and lower on intermediary finished goods imports.

Under the South Asian Free Trade Agreement, the import duty on yarn was reduced to five per cent. A ten per cent regulatory duty on import of spun yarn has been suggested by the industry. It wants the anomalies done away with.

Some 25 units have been closed down in Pakistan because of the negative impact of the tax and duty structure.

Duties are higher on raw material imports and lower on intermediary finished goods imports.