PYMA raises alarm over budget impact on SMEs

June 23, 2025 (MLN): The Pakistan Yarn Merchants Association (PYMA) has expressed strong concerns over the duty structure and policy ambiguities in the Federal Budget 2025–26.

The association warned that the proposed framework is negatively impacting the domestic textile sector, particularly small and medium enterprises (SMEs).

In a formal communication to the government and the anomaly committee, PYMA Chairman Muhammad Saqib Goodluck called for urgent reforms to improve transparency, competitiveness, and long-term sustainability in the industry.

He criticized the lack of clarity between commercial and industrial imports, noting that while industrial imports are subject to just 1% income tax, commercial imports face a much higher 3.5% rate.

According to PYMA’s calculations, the overall duty differential between the two categories stands at approximately 5.5%, including sales tax value addition.

Goodluck emphasized that this gap not only imposes unnecessary administrative burdens but also distorts market dynamics, contrary to earlier discussions that had aimed to ensure equal treatment for both sectors.

The Chairman specifically highlighted the case of Draw Textured Yarn (DTY) of polyester (HS Code: 5402.3300), which is already protected by an average anti-dumping duty of 13.84% as of June 17, 2025, imposed by the National Tariff Commission (NTC).

Given this existing safeguard, PYMA deemed any additional regulatory duties on DTY as unjustified and called for their immediate removal, recommending the rate be reduced to 0%.

On the matter of cascading customs duties, PYMA expressed concern over the current imbalance where raw materials like polyester filament yarn (PFY) and grey fabrics are taxed at 10%, while bleached or finished textile articles incur a higher 15% duty.

This structure, the association argued, unfairly penalizes downstream sectors such as knitting, weaving, twisting, and finishing particularly those dominated by SMEs, according to the press release issued.

PYMA urged the government to rationalize duties across all fabric types, including finished, semi-finished, and grey fabrics, to address distortions in the polyester textile value chain.

Vice Chairman Altaf Haroon also raised the issue of duty discrepancies involving Partially Oriented Yarn (POY; HS Code: 5402-4600) and Fully Drawn Yarn (FDY; HS Code: 5402-4700), which are not produced locally but undergo processing similar to fibre.

With customs duty on fibre recently reduced from 7% to 5%, PYMA advocated for a corresponding adjustment in the duties on POY and FDY to ensure fair and consistent treatment.

In closing, Goodluck emphasized that resolving these issues promptly is critical to preserving a stable, transparent, and globally competitive textile sector.

PYMA reiterated its willingness to collaborate with policymakers to ensure that fiscal and trade policies are aligned with industry needs and on-ground realities.

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