Page 67 - TEXtalks May-June 2021

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Budget 2021-2022 Pakistan

What is for the textile sector?

The Budget 2021-2022, 3rd of the current govern- try-friendly and termed it “balanced,” expecting to
ment, has been announced, and it was expected to lead the economy in the right direction to achieve
be a pro-industry budget by the business communi- better growth and expansion targets. The capital
ty. The new budget was being awaited much by the gains tax has also been reduced from 15% to 12.5%
textile sector due to favorable economic indicators for 2021-2022. In addition, till June 30, importers can
during the last six months. For example, economic benefit from a 5% drop in the customs duty on yarn.
growth was based on 3.57% industrial growth. With
an increment of Rs. 700 billion compared to the All Pakistan Textile Mills Association (APTMA) also
previous budget, the total value of the current termed the budget “a good step in the right direc-
budget is Rs 8.49 trillion with a GDP of 4.8%. Howev- tion.” Contrarily, criticism has also been raised by
er, the expectations have not been fulfilled regarding various industrialists and experts highlighting the
the textile sector’s aspirations. shortcomings of the current budget. One of the main
concerns across the industrial level is the missing
The industrial sector has been one of the focuses of rationalization of power tariffs. Pakistan Apparel
the government. A relief of Rs 119bn has been Forum (PAF) has also said that the textile sector has
provided regarding customs duty, income tax, and not received the required attention to reach $26
sales tax for industries in the current budget. Among billion foreign exchange in the next fiscal year.
these, a relief of Rs 19bn has been offered to sales Pakistan Readymade Garments Manufacturers and
tax and Rs 42bn for customs duty. In addition, the Exporters Association (PRGMEA) also showed deep
emerging information technology (IT) sector has concerns over the current budget mentioning that it
been allocated Rs 58bn. One of the salient features is not sufficient for the textile sector to meet the
of the current budget is duty-free imports of various expanding exports of the country. The other major
raw materials. This tariff line (duty-free raw materials) problem is that the textile industries have asked for
consists of 20,000 items which are 20% of all “zero-rating,” which has been ignored in the budget.
imports. These raw materials are used for various
industries, including textiles. The tariff has either On June 16, a joint meeting of various textile associ-
been removed entirely or reduced significantly on ations was held with Abdul Razak Dawood, Advisor
the imports of 584 tariff lines regarding regulatory to Prime Minister on Commerce, Investment, and
duty and customs duty to support industrial growth. Textile, to discuss various issues in the context of
Among 584 tariff lines getting benefits, fabric and Federal Budget 2020-21. The participants from
other textile-related products are present. KCCI, PTEA, PREGMA, APBUMA, Towel Manufactur-
ing Association (TMA), and PHMA raised their
The majority of the industrialists seem to be happy concerns with Commerce Minister for Zero Rating,
with the current budget. The presidents of the Liquidity Crunch for SMEs due to Sales Tax, DDT
Islamabad Chamber of Commerce and Industry Payments, and budgetary allocation. Mr. Dawood
(ICCI), Faisalabad Chamber of Commerce & Indus- said that he had suggested allocating Rs.50 billion
try (FCCI), Federation of Pakistan Chambers of on DDT support for the year to Minister Finance. He
Commerce & Industry (FPCCI), Pakistan Industrial commented that duty has been brought to zero on
and Traders Association Front (PIAF), Lahore yarn prices and may be extended as required.
Chamber of Commerce and Industry (LCCI), and
Karachi Chamber of Commerce & Industry (KCCI) It could be concluded that the budget is a mix of
separately commented on the benefits of Budget expectation and deprived feelings for the textile
2021-2022. They said that the budget is indus- sector. However, on the other hand, experts say the

May/June 2021

budget, which should have advocated manufacturing aspects. If Pakistan’s government does not
and maximizing agriculture yields, is now more cross-check the taxes on importing these machines,
relevant to food security and affordability. There is our sector will lose the technologically advanced
also no relaxation on the import of state-of-the-art edge over its competitors. Therefore, Industrialists
textile manufacturing machines. The technologically
advanced machines usually are designed for better ask for a kind revision to get maximum support for
production, energy efficiency, and chemical saving the textile sector. Fingers are crossed.