ISLAMABAD: Ministry of Commerce (MoC) is said to be preparing a three-year tariff rationalization plan for key value chains of the country including textile, which contributes about 60 per cent in exports, aimed at making customs tariff more predictable, well-informed sources told Business Recorder.
Prime Minister's Advisor on Commerce and Investment, Abdul Razak Dawood, is regularly holding meetings of Tariff Policy Board (TPB) to consider proposals coming from different industries individually.
"We have selected textile sector, plastic chain and few engineering goods including transformers, home appliances, pumps, motors, cables, switches for tariff rationalization plan to be announced in federal budget 2021-22," the sources added.
The government reduced customs tariff to zero or very minimal on over 1600 tariff lines related to raw materials in budget 2020-21. However, many proposals were not entertained.
Commerce Ministry, sources said, has constituted teams which will start formal work after drafting proposals for a three-year tariff rationalization plan. The teams will interact with the stakeholders and hold seminars and public hearings to seek opinions of concerned sectors. The exercise will be completed within next four or five months.
However, it would depend on how much revenue hit the government is willing to take and which sector would be given preference. Commerce Ministry, sources said, had formed tariff rationalization plan for iron and steel for budget 2020-21 but the government did not adopt it, adding that next year, this plan would again be presented before the competent forum.
The sources said, previously, tariff rationalization proposals used to be entertained at the end of fiscal year but the practice has changed and now such proposals are considered whenever the industry sends proposals to the Commerce Ministry.
Tariff Policy Board has already taken a principled decision that any proposal about change in Additional Customs Duty or Regulatory Duty would be considered by the Board for recommendation to the ECC.
"Any change in customs duty can only be made at the time of budget. However, changes in Additional Custom Duty or Regulatory Duty are possible any time at the level of Economic Coordination Committee (ECC) of the Cabinet and ratified by the Cabinet," the sources continued.
Commerce Ministry has also prepared a proposal that duty on those fibers or yarn which were not made locally, should be reduced. The proposal prepared by the Textile Section of Commerce Ministry was for reducing duty on jute, flax fibre, nylon ryan, etc.
The sources said, Strategic Trade Policy Framework (STPF) 2020-21 is also being given final touches before submission to the ECC and then Cabinet. Commerce Ministry, sources said, has also formulated export and import forecasting model for each sector for the next five years, to be reviewed every six months in the light of change in international trends.
On the basis of consultative process involving private sector stakeholders, Ministry of Commerce has projected $ 26 billion exports for 2020-21, $ 31 billion for 2021-22, $ 345 billion in 2022-23, $ 40 billion in 2023-24 and $ 46 billion in 2024-25, the sources maintained.
Copyright Business Recorder, 2020
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