ISLAMABAD: All Pakistan Textile Mills Association (APTMA) has requested the Federal Board of Revenue (FBR) to make it mandatory that all consignments of imported yarn from India and China be subjected to independent inspections at three stages to control the excessive imports of cotton yarn by misuse and mis-declaration.

According to a letter written to the FBR, the APTMA pleaded for making it mandatory for all consignments of imported yarn from India and China under the SRO 322 and SRO 450 be subjected to independent inspection at: (i) pre-shipment inspection at the time of export of yarn from Indian and Chinese spinners, (ii) at the port of entry in Pakistan and (iii) at the time of export from the beneficiary.

The APTMA stated that it frequently highlighted the issue of excessive imports of cotton yarn especially by misuse and mis-declaration and the situation has become so critical that over 144 spinning mills have been closed and remaining are on the verge of closure.

During the last financial year 2016-17, over 78,000 tons of yarn has been imported compared to 51,000 tons during the financial year 2015-16. During the period of July 2016 to March 2017 for which PRAL data is available total yarn imports were 61,000 tons and 87% of these imports (53,300 tons) were made under Duties and Tax Remission for Export (DTRE).

During APTMA meetings with FBR on 28th April, 2017 for discussing the issues faced by the domestic textile industry and submission of proposals for federal budget 2017-18, the matter of abuse of SRO 327 and SRO 450 to evade duties against import of cotton yarns was also discussed. It was decided that APTMA’s representative will meet with Faiz Ahmed, Chief (Customs) on May 2, 2017.

The meeting with Faiz was quite productive and the matter was discussed threadbare but the meeting remained inconclusive due to constraints shown by the FBR, which are stated as follows:

Presently, around 35 percent of the importers and over 80 percent of the exporters are provided with the facility of green channel, which results in automatic clearance consignments at both import and export stage. In order to impose inspection, the facility of green channel given to importers and exporters, need to be withdrawn and all inbound and outbound consignments will be put in either yellow or red category resulting in delays and over-congestion at the ports.

It will not be possible to draw samples at export stage due to the time constraint.

The FBR under the existing law can only check the samples at its own laboratory or at PCSIR, it cannot get the samples tested by independent inspection companies like SGS, etc, and for this APTMA should contact Ministry of Commerce for taking it mandatory for yarn imported from India to be subjected to pre-shipment inspection in its upcoming import policy.

The constraints mentioned above can only be solved by FBR itself, as it is the regulating authority which not only controls the import and export of goods but also collects the revenue necessary to run the economy of the country. As per SRO 450, it is mandatory that three samples should be collected at the import stage, so the constraint of green channel is not valid.

Furthermore, in the period of first nine months of the current financial year (July- March 2017) the import under the exemption schemes stood at 53,303 tons or 198 tons/day (10 containers), we are of the opinion that proper sampling of ten containers by independent inspection agencies, that too at different ports of entry, is not a momentum breaking task.

In the first nine months of the current financial year, the government has foregone Rs 7.9 billion in duties and taxes on the import of yarn under the exemption schemes, the loss to the domestic economy/ industry is way above it, as the imported yarn is flooding the domestic market and the import is increasing with no end in sight.