Prime Minister Shahid Khaqan Abbasi has given a one week deadline to Ministry of Commerce and Textile to firm up a "viable" package for the textile sector in consultation with other concerned Ministries, well informed sources told Business Recorder. Giving the background, the sources said, in meetings with Federation of Pakistan Chamber of Commerce and Industry (FPCCI) and All Pakistan Textile Mills Association (APTMA) held on October 12 and October 13, 2013 respectively, Prime Minister discussed multitude of issues facing the exporters and facilitations provided by the government.
The PM, sources said, desired that Ministry of Commerce & Textile in consultation with textile associations may come up with recommendations in order of preference, to facilitate long term export growth. Textile Associations were requested to provide medium to long term recommendations including reducing the cost of doing business to create level playing field for textile manufacturers and exporters vis-à-vis competitor countries.
During the 7th meeting of Federal Textile Board held on November 4, 2017 under the chairmanship of Minister for Commerce and Textile, draft recommendations were discussed in detail and after due deliberation it was decided to forward these recommendations to the Prime Minister. According to Textile Division, these recommendations will not only reduce cost of doing business but also encourage investment, compliance, quality, skills development and value addition.
Ministry of Textile Industry submitted the following recommendations in order of preference:
(i) Energy affordability: Textile Associations foremost demand was removal of tariff rationalization and financial surcharge amounting to Rs 3.10 per unit and Rs 0.43 per unit respectively which would bring their energy cost at par with regional competitors. Gas price disparity amongst provinces was also a source of grave concern for the textile industry. A uniform price of Rs 600 per MMBTU for natural gas and RLNG was recommended to be offered to all textile captive & industrial users to align their costs with those of regional competitors.
(ii) Sales Tax Refunds: Textile Associations argued that sales tax proceeds are their capital and majority of claims/refunds were stuck up creating severe liquidity crunch. It increases cost of doing business for big exporters as they have to take loans from the banks and it shuts down the SME sector. Similarly a large sum of money in shape of income tax refunds and customs duty drawback was also stuck up with FBR. All refunds must be processed by FBR within 45-60 days of filing.
(iii) Judicious Settlement of GIDC: Textile Associations demanded that GIDC be withdrawn. The matter was in litigation at Supreme Court, Lahore High, Sindh High Court and Peshawar High Court so it was suggested that all GIDC payments and arrears for unregulated textile sector from 2012 onwards be treated without discrimination (ie all be refunded/waived for textile).
(iv) Zero Rating of Packing Material: Packing material constitutes a significant cost for the value added sector. Textile industry was demanding packing material be included in zero rating regime immediately.
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