In 2005, Pakistan imposed an anti-dumping duty of up to 18 per cent on imported filament yarn from Thailand, Malaysia, Korea and Indonesia. At that time, 17 local yarn manufacturers were operating in the country. Since then the number of local manufacturers has come down to just four units.

In 2005, stakeholders agreed that in order to bring fabric trade under a legal umbrella, the maximum duty on fabric should not exceed 15 per cent. Hence the duty on yarn was fixed at seven per cent. But over the years the duty on yarn has escalated to 11 per cent without any reason, causing distortions and making raw material for the downstream industry more expensive. Yarn merchants say the yarn duty should be brought down to nine per cent to give benefits to the weaving and knitting industry.

Makers of polyester filament yarn in Pakistan can only meet 25 per cent of the downstream industry’s demand, while the remaining 75 per cent requirement is met through imported yarn. Yarn merchants say, the long term solution for dealing with this issue is to modernise and upgrade plants of local manufacturers besides enhancing their capacity to achieve economies of scale. They emphasise the regulatory duty is not the right solution.