Page 68 - TEXtalks May-June 2021

lead the economy in the right direction to achieve
ment, has been announced, and it was expected to
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%
for 2021-2022. In addition, till June 30, importers can
textile sector due to favorable economic indicators
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
termed the budget “a good step in the right direc-
previous budget, the total value of the current
tion.” Contrarily, criticism has also been raised by
budget is Rs 8.49 trillion with a GDP of 4.8%. Howev-
various industrialists and experts highlighting the
er, the expectations have not been fulfilled regarding
shortcomings of the current budget. One of the main
the textile sector’s aspirations.
concerns across the industrial level is the missing
rationalization of power tariffs. Pakistan Apparel
The industrial sector has been one of the focuses of
Forum (PAF) has also said that the textile sector has
the government. A relief of Rs 119bn has been
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
Exporters Association (PRGMEA) also showed deep
tax and Rs 42bn for customs duty. In addition, the
concerns over the current budget mentioning that it
emerging information technology (IT) sector has
is not sufficient for the textile sector to meet the
been allocated Rs 58bn. One of the salient features
of the current budget is duty-free imports of various
expanding exports of the country. The other major
problem is that the textile industries have asked for
raw materials. This tariff line (duty-free raw materials)
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
On June 16, a joint meeting of various textile associ-
industries, including textiles. The tariff has either
ations was held with Abdul Razak Dawood, Advisor
been removed entirely or reduced significantly on
to Prime Minister on Commerce, Investment, and
the imports of 584 tariff lines regarding regulatory
Textile, to discuss various issues in the context of
duty and customs duty to support industrial growth.
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
on DDT support for the year to Minister Finance. He
try (FCCI), Federation of Pakistan Chambers of
commented that duty has been brought to zero on
Commerce & Industry (FPCCI), Pakistan Industrial
and Traders Association Front (PIAF), Lahore
yarn prices and may be extended as required.
Chamber of Commerce and Industry (LCCI), and
It could be concluded that the budget is a mix of
Karachi Chamber of Commerce & Industry (KCCI)
expectation and deprived feelings for the textile
separately commented on the benefits of Budget
sector. However, on the other hand, experts say the
2021-2022. They said that the budget is indus-
68 The Budget 2021-2022, 3rd of the current govern- try-friendly and termed it “balanced,” expecting to
Budget 2021-2022 Total Relief for Industrial Sector (Rs. 119 Bn)
16%
20%
49%
35%
80%
Other Imports Textiles and other Raw Material (duty-free) Sales Tax Customes Duty IT
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.
May/June 2021