Rs 15 billion DLTL claims: MoF releases only Rs four billion in fiscal year 2011

The ministry of finance released only 26 percent or Rs 4 billion funds for payment of Drawback of Local Taxes and Levies (DLTL) against the claims of some Rs 15 billion during FY11. Sources in the ministry told Business Recorder on Tuesday that owing to shortage of funds, less than 30 percent funds have been transferred by the MoF to the State Bank of Pakistan for the payment of DLTL to textile exporters during the current fiscal year.
Till June 21, 2011, the SBP received Rs 14.96 billion worth claims of DLTL from textile sector. Against these claims, the ministry of finance released only Rs 4 billion, sources added. In addition, out of total funds provided by the ministry, the SBP disbursed Rs 3.60 billion against DLTL claims during the year, and still Rs 11.36 billion claims are unpaid.
Sources said in the Textile Policy, some Rs 17 billion were proposed to be reserved for DLTL for the year 2009-10 and Rs 27 billion for the year 2010-11. However, despite the ministry of textile proposal, the MoF was unable to transfer the proposed amount because of less than target revenue collection and shortage of funds.
Textile sector was allowed this facility under Drawback on Taxes and Levies Order, through SRO No 3 (1)TID/09-P-I dated 1st September, 2009. Under this order textile exports shipments made from 1st September, 2009 to shipments made till 30th June, 2011 were declared eligible for DLTL. The ministry had also assured time extension till the expiry of the Textile Policy 2009-2014 so that the textile sector could survive.
As per the notification, 3 percent of DLTL will be paid to garments, 2 percent home textile and one percent cotton cloth. In addition, knitted fabrics will also be eligible for one percent DLTL. "The promises made have not been fulfilled by the federal government. This has also become impossible for exporters to face stiff competition in the global market with a lofty export target of $25 billion," said Jawed Bilwani, Chief Co-ordinator Value Added Textile Forum.
He told BR that at the end of current fiscal year, the outstanding amount of DLTL would be around Rs 23 billion as exporters are still submitting the claims. Recently, the Indian government had provided a subsidy of $438 million to the home industry under an scheme for upgradation of textile export sector despite the fact that textile in India ranked No 4 in the overall exports of India. While in Pakistan, where textile exports rank No 1 as it generates huge employment opportunities and earns precious forex for the country, the government has completely ignored it, he added.
He said sudden changes in the government functionaries have seriously hurt textile policy. The scheme vide SRO No 3 (1)TID/09-P-I dated, which is due to expire on June 30, 2011, should be extended for another three years to enable textile exporters to increase their exports and meet the ambitious target of $25 billion, he said. He said due to delay in payment of refunds, textile exporters are facing severe liquidity crunch and several export-oriented units are on the verge of closure.