Conditional duty-free export of yarn allowed-Texglobe

KARACHI (June 07 2010): The ministry of textile industry has allowed conditional duty-free export of cotton yarn, with minimum price and quantity restrictions. Sources told Business Recorder on Saturday that the ministry of textile industry on Friday had issued notification for amendment in the SRO issued by ministry of commerce on May 12, 2010 for imposition of 15 percent regulatory duty on export of cotton yarn.

As per notification, the ministry of commerce has allowed export of cotton yarn with immediate effect with some restriction including quota and price. They said that current relaxation for the export of cotton yarn has been granted after intervention by finance minister Abdul Hafeez Sheikh, as a delegation of spinners met him last week at Islamabad to resolve the regulatory duty issue, besides negotiations between and value added sector.

The ministry has allowed duty free exports of cotton yarn, of which letters of credit (LCs) had been opened by foreign buyers before the imposition of regulatory duty. However, export would be allowed after the scrutiny conducted by the value-added and spinners' representatives. Sources said that LCs of about 35,000 tons of cotton yarn had been established by foreign buyers before the imposition of duty. However, the ministry has not allowed complete export of already booked orders.

"Exports of yarn against valid L/Cs, on first-come-first-served basis, opened before May 12, 2010 will be allowed duty free for a maximum quantity of 32,000 tons and a committee in the Ministry of Textiles with representatives from both sides will scrutinise such LCs and issue necessary authorisation letters," the notification said.

In addition, value-added yarn, fetching a price of $3.5 per kg or more will also be allowed duty free with a maximum quantity of 2000 tons per month to be counted from May 13, 2010.

"Re-exports of yarn against imports of cotton under temporary importation schemes, such as DTRE, will be allowed duty free for those who were already registered to use such facilities before May 12, 2010. However, duty will be imposed on the value of exports over and above the value of imported cotton," the notification said.

The ministry has extended the date of regulatory duty, and duty will be applicable until July 26, 2010 instead of earlier announcement of July 13, 2010. The ministry has also asked Federal Board of Revenue to issue necessary notification to give effect to the current decisions and on the request of textile ministry FBR has also issued SRO for the implementation of these amendments.

Sources said with current amendments, spinners can export some 40,000 tons of cotton yarn without duty during the next two months. They said the amendment has been made after the two days-long negotiation between spinners and value-added textile sector committees, constituted by the ministry of textile last week at Karachi with Farooq, minister textile in the chair, while secretary textile Dr Waqar Masood and commissioner textile Idress Ahmed were also present.

Value added textile committee was headed by Zubair Motiwala, while Basheer Ali Muhammad headed the committee of spinners. Sources said that at that time ministry of textile had in principle agreed with spinners' proposal and now they have been allowed the export of cotton yarn with price and quota restrictions.