Duty drawback refunds: Delay in payment adversely impacting export cycle

FAISALABAD: Undue delay in payment of duty drawback refunds is adversely impacting the export cycle as exporters’ liquidity have already taken a strong negative hit from adverse impacts of global recession. Government must take immediate measures to ease off the financial stress and gear up the export growth.

In a statement issued on Thursday, PTEA Patron-in-Chief expressed serious concerns over unnecessary delay in payment of exporters’ duty drawback refunds. Suspension of refunds is creating acute financial stress for exporters, already burdened by escalating costs and intense global competition. He described that despite the existence of a fully automated system that has been operating efficiently for years refunds have been released for only 33 days out of the last 180.

He underscored that the textile sector, contributing over 60% of Pakistan’s total export earnings, cannot afford such setbacks at a time when boosting exports is critical for stabilizing the national economy.

Duty drawback refunds are not incentives; they are a rightful reimbursement of duties and taxes already paid by exporters, he stated and added that blocking these funds for months is equivalent to withholding exporters’ own capital, disrupting their cash flows, and diminishing their ability to fulfil orders, honour commitments, and remain competitive in international markets.

He explained that the liquidity crunch has compelled many exporters to rely on costly borrowing to sustain operations, inflating the overall cost of doing business. Small scale exporters are lacking financial resilience, face the risk of closure posing serious threats to employment, industrial growth, and economic stability.

PTEA Chairman Sohail Pasha stressed that timely refund disbursement is both a matter of fairness and an essential requirement for sustaining export growth. He added that the mainstay of country’s economy is under severe pressure due to a combination of factors including rising production costs, liquidity constraints from delayed refunds, and stiff competition in international markets.

Such setbacks are eroding Pakistan’s share in global trade and undermining the industry’s ability to sustain employment and contribute to national revenues. He emphasized that timely government intervention is crucial to arrest the declining trend. Immediate release of exporters’ stuck-up funds, reduction in input costs, and provision of a regionally competitive business environment are essential to revive growth momentum.

The Vice Chairman PTEA Ameer Ahmad called for urgent and decisive measures to resolve the refund crisis. Confidence in government systems is fundamental for export promotion and any artificial delays erode this confidence and discourage exporters from expanding operations or investing in new opportunities, he added.

Ensuring uninterrupted refund payments would be a fundamental step toward enabling the textile industry to drive export-led growth, he underlined.

He reaffirmed PTEA’s commitment to engaging with policymakers in pursuit of workable solutions but cautioned that prolonged inaction could cause irreversible damage to Pakistan’s export sector. Immediate intervention is imperative to safeguard the textile industry, protect livelihoods, and reinforce the foundations of the national economy.

Copyright Business Recorder, 2025