ISLAMABAD: Government will release Rs8 billion under drawback of local taxes and levies (DLTL) claims of industries from Friday (tomorrow) to help them overcome liquidity crunch, commerce adviser said on Wednesday.
Adviser to Prime Minister for Commerce and Investment Razak Dawood said the fund will be transferred starting from 2nd July. “I hope that this will facilitate the cash flow issues of our business exporters and strengthens their production,” Dawood wrote on Twitter.
The government has allocated Rs20 billion for DLTL scheme in the budget 2021/22 despite demand of textile exporters, who are the main claimants, to increase the allocation to at least Rs75 billion to clear backlog and new duty drawback of taxes (DDT) / DLTL claims.
They said the central bank is yet to clear Rs32 billion DLTL payments of exporters. Textile exports are expected to increase by 17 percent to cross $15.5 billion this fiscal year as the government started DLTL payments, they said.
Textile exports increased 7.3 percent in 2010 and 35 percent in 2011 when then government started DLTL disbursal in 2009, but they decreased around 11 percent in 2012 due to withheld payments of DLTL, according to an estimate of Pakistan Hosiery Manufacturers and Exporters Association (PHMA).
Textile exporters said duty drawback of taxes on garment, home textile and fabric exports should be provided at 7, 6 and 5 percent, respectively on shipment basis for next five years to compete in the international market as competing countries are extending up to 16 percent. Incremental DDT on an increase of 10 percent exports over previous year should also be provided at two percent. “This will bring huge investments in textile sector and shall encourage new-comer exporters to invest in textile sector,” PHMA said.
The government needs to streamline and automate the system for disbursement of DLTL / DDT, which should be electronically transferred to exporters with export proceeds.
Value-added textile exporters have been demanding duty-free import of cotton yarn, withdrawal of five percent customs duty on import of 32 single yarn and below count and permission of cotton imports from any country till cotton yarn shortfall is controlled. Value-added textile export industry contributes around 62 percent in total exports, provides highest urban employment particularly to female workforce and supports approximately 40 allied industries.
Textile exporters termed the budget relatively better, but they said it couldn’t consider no-payment-no-refund system, withholding tax reduction, and suspension of export development fund surcharge.