Yarn manufacturers in Pakistan want cotton imports to be duty-free. The country needs to import five million cotton bales to achieve textile export targets in the current fiscal year. Duties and taxes on cotton imports comprise 11 per cent of the import price. Industry players say taxes have made this essential import unviable for yarn manufacturers. On the other hand Pakistan needs to import cotton. There has been a significant shortfall in domestic cotton production. This has been badly hit by untimely rains and pest attacks. Pakistan’s cotton production estimates for the year have been revised down by 32 per cent.

Yarn is used by the fabric and cloth-making sectors of the textile industry. Duties and taxes on imports include a three per cent customs duty, a two per cent anti-dumping duty, a five per cent sales tax and a one per cent income tax. Besides, there is a 17 per cent general sales tax on yarn, which is refundable.

Pakistan’s textile exports accounted for 61 per cent of total export proceeds in the first two months of the current fiscal year. They had come in at 58 per cent of the total export proceeds in the previous fiscal year.