The duty on polyester staple fibre should be removed

The synthetic fibre industry is passing through one of the most difficult periods of its history. Polyester and Acrylic are synthetic fibres and could easily be switched to other natural and synthetic fibres. This year Polyester industry is also faced with unprecedented hike of petroleum and petrochemical products which serve as primary raw material. Short supply of polyester staple fibre coupled with its increased prices has been hitting hard the spinning sector and the local producers of polyester staple fibre are reportedly planning to further raise its price.

Polyester yarn is mostly used with fine and super fine quality of cotton of 40 counts and above which constitutes 25% of the total cotton production. Around 75% of Pakistan raw cotton is used in coarse and medium count yarn i.e. 10s, 16s and 21s and up to 36s. Local spinners, usually consume polyester with 40 count and 65 count cotton, in the ratio of 65% cotton with 35% polyester.

The shortage of supply has been caused due to fear of closure of biggest polyester staple fibre producer unit in the country as well as operation of a number of other units under capacity. A number of spinning units have already shut down their operations while many others have been operating partially, which resulted in besides others, unemployment of thousands of workers.

Polyester Staple Fibre (PSF) became popular in Pakistan in mid-90 because of its characteristic suitability to blend with cotton, wool and viscose for spinning blended yarn. Unlike other yarn it was found to be highly suitable for weaving finer fabrics. It was easily dye and suitable for printing. At present, there are seven major producers of PSF in the country. These are Dewan Salman, Dhan fibres, Ibrahim fibres, ICI Polyester, Pakistan Synthetic, Rupali and National fibre.

At present fibre mix of Pakistan's textile industry is at 20:80 MMF to cotton as against the world average of 60:40. The consumption of man made fibre (MMF) in Pakistan is lower in comparison with developed nations, due to low demand for industrial textiles and non-textiles applications (e.g. auto industry, geo textiles, etc.), lack of marketing and technical skills in the textile downstream, lack of machinery (in the textile downstream) for high end products.

During the first 10 months of FY08, overall textile exports stood at $8.649 billion as compared to $8.875 billion during the same period of last fiscal year, depicting a decrease of $226 million.  The reasons behind the decline in the growth are said to be high cost of doing business and a shortfall in cotton crop during the current fiscal. 

The Government has fixed $ 11.40 textile export target for 2007-08 as compared to $ 10.40 billion of last fiscal year, but due to severe energy crisis, shortage of cotton, political uncertainty and deteriorating law and order situation have badly undermined the textile sector’s capability of increasing exports to over and above the last financial year’s benchmark.

 The  government should therefore reduce import duty on polyester staple fibre (PSF) the alternative to cotton  from the current level   of  6.5% to 0%.    The Indian Government has in the current budget has reduced the  duty on polyester fibres and yarns from 10% to 7.5% and on raw materials such as DMT, PTA and MEG from 10% to 7.5%. This is in order to provide the required relief to the Indian textile industry which is facing extraordinary high prices of cotton despite a bumper crop this year.