PYMA slams duty structures, policy ambiguities in federal budget

KARACHI: Muhammad Saqib Goodluck, Chairman of The Pakistan Yarn Merchants Association (PYMA), has risen significant concerns regarding various duty structures and policy ambiguities presented in the Federal Budget 2025–26 that are adversely impacting the textile sector, particularly small and medium enterprises (SMEs).

In a communication to the government and anomaly committee, the PYMA Chairman urged immediate action to address key concerns hindering transparency, competitiveness, and the long-term sustainability of the domestic textile industry. He noted that the budget does not provide adequate clarity on the policy distinctions between commercial and industrial imports. He emphasized that industrial imports are subject to only a 1% income tax, while commercial imports face a significantly higher rate of 3.5%.

Our calculations confirm that the overall duty differential between industrial and commercial imports is approximately 5.5%, including sales tax value addition, a disparity that does not justify the resulting administrative burdens and market distortions. He underscored that prior deliberations had resulted in a shared expectation that equal treatment would be ensured for both sectors.

Saqib Goodluck emphasized that Draw Textured Yarn (DTY) of polyester (HS Code: 5402.3300) is already subject to an average anti-dumping duty of 13.84%, imposed on dated 17th June by NTC, 2025. In light of this existing protection for the domestic industry, PYMA considers the continuation or imposition of any additional regulatory duty on DTY to be unjustified. PYMA strongly recommends that the regulatory duty on DTY be reduced to 0%.

Regarding customs duties, the PYMA Chairman pointed out the structural imbalance, wherein both raw materials (PFY), grey fabrics are subject to a 10% duty, while bleached or finished articles attract 15%. This cascading duty structure disproportionately impacts core sectors such as knitting, weaving, twisting, and finishing - particularly affecting SMEs. PYMA urged the government to promptly rationalize the duties on all types of fabrics (finished, semi-finished, and grey fabrics currently subject to a 15% duty); to justify the cascading of polyester value chain items.

PYMA Vice Chairman, Altaf Haroon also drew attention to the discrepancy in duty rates applied to Partially Oriented Yarn (POY; HS Code: 5402-4600) and Fully Drawn Yarn (FDY; HS Code: 5402-4700). These yarns are not produced domestically and undergo processing similar to that of fibre. While the customs duty on fibre has been reduced from 7% to 5%, PYMA appealed for equal treatment of POY and FDY by aligning their customs duty with that of fibre at 5%, in the interest of fairness and consistency.

Saqib Goodluck concluded by stressing that timely resolution of these issues is essential to maintaining a stable, transparent, and globally competitive textile sector.

PYMA reaffirmed its commitment to working collaboratively with policymakers to ensure that fiscal and trade policies accurately reflect industry needs and ground realities.

Copyright Business Recorder, 2025