Textile, PSF and Chemicals - Budgetary Impact

Textile, PSF and Chemicals – Budget Impact


Minimum wage up to PKR6,000

The minimum wage level has been raised from PKR4,600/- to PKR6,000 per employee per month.

Withdrawn of 0.5% on turnover

Minimum tax payable on the declared turnover @ 0.5% is being proposed to be withdrawn.

R&D subsidy

R&D subsidy on exports of fabrics and value added products has not been mentioned in Budget FY09 against a net subsidy of PKR19bn for FY8.
Reduction of duties on various items

Duty has been reduced on calcium carbide from 15% to 5%; PTA from 15% to 7.5%; PSF 6.5% to 4.5%; Caustic soda from Rs.5,000/MT to Rs.4,000/MT and Textile Buckram from 25% to 10%.

Zero rating of Acetic Acid

Acetic acid is used extensively in the textile industry which is zero rated. To save the manufacturers of acetic acid from the hassle of refunds, its raw materials including molasses has also been zero rated.

Zero rating of Caustic Soda etc

It is being proposed that caustic soda/.flakes, cotton linter and sequins should be zero rated so that financial liquidity in the textile sector is increased and the textile producers are free from the hassles of delays in getting refunds on this account.

Duty on polyester films reduced

The rate of duty for polyester films is proposed to bring at par with other items of the same category and it will also become liable to 20% duty.

Impact - Neutral to Positive

• The increase in minimum wage rate would further add to the cost pressures for the industry especially for spinning and weaving segments.

• On the other hand zero rating of some major inputs for textiles should augur well for the sector.