Home Textile Govt. promises incentives to textile sector to improve static export growth

Govt. promises incentives to textile sector to improve static export growth


According to Mr Abdul Razak Dawood, Advisor to PM on Commerce, govt. is unlikely to achieve export target set for the current FY. His earlier projections of $27-28 bn exports, despite govt. subsidies, were unrealistic.

He said that export proceeds in dollar terms remained static and blamed the global slowdown for the static growth claiming that global trade decelerated by 3pc while the price of commodities also fell by over 7pc amid trade war between China and US.

He has held several meetings with tax officials regarding the issue of pending refunds with the FBR. He added that the FBR wants to restore full sales tax on the local supply of textile and other four sectors in the domestic market.

The adviser emphasized the need for increasing tax revenues in the country and added that the incumbent government had taken right decisions to collect due taxes from all individuals including industrialists. He said exports in the value-added sectors have been on a positive trend whereas yarn exports fell during the period under review.

PTI has decided to continue providing incentives to the textile industry to boost value added textile exports to $30 billion in coming five years. Mr Khurram Mukhtar, Patron-in-Chief PTEA, confirmed that a task force led by Dr Salman Shah will formulate a plan for the purposal within coming eight weeks. He told, “Textile exports in first nine months of the current fiscal year, grew 19% in quantity and 3% in value due to the exchange rate adjustment.”

Key incentives
– The special energy package with electricity at $7.5cents per kWh and gas at $6.50 per MMBtu will continue for five zero-rated sectors.
– EFS and LTFF ceiling will be increased by Rs 100 billion and Rs 200 billion.
– DLTL will continue for five zero-rated sectors.
– Rs 12 billion in refunds was released under DDT for textile and non-textile sectors.

Road map for remaining refunds of Rs 115 billion
If all exporters open an account with CDC, FBR will issue promissory notes for sales tax refunds of Rs40billion by the end of May. Another Rs 25 billion would be released for the DLTL/DDT schemes till June 20, 2019. The FBR will also issue promissory notes of Rs 50 billion having sales tax refunds and income tax by the end of July 2019. The promissory notes will be of three-year tenure with an interest rate of 10%. Also, a 5% customs duty to be applied to raw cotton imports from July 1, 2019.

According to the external trade statistics for the month of April, 2019 by PBS, the exports in April, 2019 was $2,094mn (provisional) as compared to $1,979 mn (provisional) in March, 2019 showing an increase of 5.81pc but decreased by 1.54pc as compared to $2,127 mn in April, 2018.

The exports during July–April, 2018-2019 totaled $19,169mn (provisional) against $19,191mn during the corresponding period of last year showing a decrease of 0.12pc.

Main commodities of exports during April, 2019 were Knitwear (Rs34,170mn), Readymade garments (Rs 32,658mn), Bed wear (Rs 25,527mn), Cotton cloth (Rs 25,208 mn), Cotton yarn (Rs 14,909 mn), Towels (Rs 9,977 mn) and Made-up articles (Rs 8,112 mn).

Based on the provisional figures of imports and exports the balance of trade in April, 2019 was (-)2,659 mn US dollars. The balance of trade figures cumulative from July-April, 2018 – 2019 were (-)26,302 mn US dollars.


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