Islamabad, Apr 15 (PTI) The Pakistan government has decided to withdraw customs duty on imported cotton yarns till June to ensure smooth supply to the country's struggling textile industry, according to a media report on Thursday.

The textile export sector, which was already under pressure due to the COVID-19 pandemic, has been continuously demanding duty-free import of cotton yarn from all over the world, including India, the world's biggest producer, to avert any big loss to textile exports.

The textile industry voiced its disappointment after the Imran Khan government rejected a proposal on April 1 to import cotton from India, saying it is the need of the hour to avoid a massive slump in the country's exports.

The Economic Coordination Committee (ECC) which met on Wednesday with Minister for Finance Hammad Azhar in the chair approved the withdrawal of customs duty to ensure smooth supply of cotton and cotton yarns to the value-added industry, while bridging the gap between domestic production and overall demand for the inputs, The News reported.

The customs duty will remain zero till June, and is subject to “the approval of the Cabinet,” Adviser to Prime Minister for Commerce and Investment Razak Dawood said in a tweet.

Dawood said the Economic Coordination Committee of the Cabinet withdrew customs duty on import of cotton yarns to facilitate the value-added exporters on a summary moved by the Ministry of Commerce. The government in December last already waived five per cent regulatory duty.

Wary of a downbeat cotton outlook amid significant decline in the crop output, textile businesses again started to see a glimpse of hope to build international competitiveness considering an exchange rate- driven erosion of margins.

“Only the half is done,” said Jawed Bilwani, chairman of Pakistan Apparel Forum that also demands imposition of duties on cotton yarn exports.

“We want the same level of duties on yarn exports as were on yarn imports,” he added.

Although yarn prices are seen declining, textile exporters still term it exorbitantly high. Pakistan is grappling with a challenge to reverse falling cotton production that was estimated to fall 40 per cent.

With drop in output, textile business houses fear the price spike which they believe could be controlled to get hold of export orders diverted from countries under coronavirus lockdown.

The government is yet to facilitate imports via land routes from Uzbekistan and India that are more cost-effective, according to the paper.

The Cabinet headed by Prime Minister Khan on April 1 rejected the proposal of the high-powered committee to import cotton from India, with Foreign Minister Shah Mahmood Qureshi asserting that there can be no normalisation of ties until New Delhi reverses its decision in 2019 to revoke the special status of Jammu and Kashmir.

The Cabinet's decision disappointed the country's textile export industry.

India is the world's largest cotton producer. India's cotton exports jumped over 40 per cent to 10 million bales (of 170 kg each) in the 2018-19 marketing year on strong overseas demand.

The ECC's proposal to import cotton from India had raised hopes of a partial revival of Pakistan-India bilateral trade relations, which were suspended after the August 5, 2019 decision of New Delhi to revoke the special status of Jammu and Kashmir.

In May 2020, Pakistan lifted the ban on import of medicines and raw material of essential drugs from India amidst the COVID-19 pandemic.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)