Govt has noted challenges to textile industry: PTEA

FAISALABAD: The government has taken notice of challenges facing the textile industry and initiated steps to address them, including the assurance of disbursing deferred sales tax refunds within a week.

This was announced following a meeting of Federal Minister of State for Finance, Revenue and Energy Ali Pervaiz Malik with Khurram Mukhtar, patron of the Pakistan Textile Exporters Association (PTEA), here on Tuesday.

Talking to The News, Khurram said the government committed itself to prioritizing the resolution of key issues such as increased production costs due to rising energy tariffs and delays in refund disbursements, which resulted in severe liquidity constraints. He emphasized the need for immediate comprehensive reforms to tackle the critical challenges faced by Pakistan’s export sector, highlighting the importance of releasing pending refunds, rationalizing energy tariffs, improving access to capital, reducing interest rates and swiftly restoring the Export Facilitation Scheme (EFS).

Mukhtar said the exporters were under significant financial pressure due to pending refunds related to deferred sales tax, duty drawback, DLTL (drawback of local taxes and levies), TUF (technology upgradation fund), markup subsidies and income tax. He urged the government to ensure that refunds are processed within the agreed 72-hour timeframe to alleviate the financial burden on the exporters and improve liquidity in the sector. He called for the elimination of all cross-subsidies imposed on industrial tariffs, particularly the subsidy provided to the fertilizer sector, which was currently being taken from the export sector.

He stressed the necessity of aligning energy tariffs with the export strategy to maintain the global competitiveness of Pakistan’s industry. He advocated an immediate reduction in interest rates to 14%, stating that the current rates were hindering the creation of a healthy business environment. Additionally, he emphasized the importance of continuing the Export Facilitation Scheme to document the entire value chain and support export manufacturing. He pointed out inconsistencies in the taxation system, noting that the exporters were now subject to a 2% advance tax, while domestic businesses in the same sector were only paying 1.25%. He called for an end to this discriminatory practice and suggested that the 0.25% Export Development Surcharge (EDS) be suspended until the funds already collected were utilized for export development.

He criticized the Sindh government for imposing a 1.8% tax on imports under the EFS, which were intended for re-export after value addition, arguing that such imports should be exempt from all taxes, duties and levies. He urged the Punjab government to abolish the 0.20% stamp duty on export-related bills of exchange, a practice not followed by any other province. He concluded by stating that the prime minister had directed all relevant ministries to implement necessary reforms, which were expected to lead to significant improvements in the country’s business environment in the coming months.