Traders in Pakistan are against the imposition of regulatory duty on yarn and thread. They say, yarn and thread are the raw materials of the textile sector and duty on them is not acceptable as the imposition of duty will adversely affect textile exports and throw people in the textile sector out of employment.

Since the textile sector is the backbone of the country’s exports, and most of the export earnings come from this sector, the imposition of duty on this sector would cause the sector to suffer from a severe financial crisis which will directly harm the economy.

Pakistan is an importer of polyester filament yarn which is the main raw material in textiles because yarn is not a finished product. Cotton has been replaced by yarn and the textile industry in Pakistan is largely dependent on imported yarn. Pakistan has a 17 per cent general sales tax on textile exports. To improve the liquidity position of exporters and competitiveness in the global market, and to prevent fraud and smuggling, the textile industry wants zero rating to be brought back. Due to the ongoing economic crisis in Pakistan, a shortage of gas and expensive electricity, the cost of production is already at high levels and due to the financial crisis most of the textile mills have closed down and more are on the verge of closing down.