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Tuesday March 19, 2024

Textile industry frets over indifference to proposals

By Mansoor Ahmad
May 27, 2017

LAHORE: Textile mills on Friday expressed disappointment over the federal budget, saying none of the proposals their association presented to Finance Minister Ishaq Dar was incorporated in the budget speech.

Amir Fayyaz, chairman of All Pakistan Textile Mills Association (Aptma) said even the amount allocated for the ‘much-touted’ export package has not fully been released. Against an expected refund payment of Rs10 billion a month from February 15 onwards, the government released only two billion rupees in the past four months. Exports would remain stagnant without a transparent and automatic mechanism for the announced funds, he added.

Fayyaz further said no relief was either announced in energy cost. Energy is an important element of cost of production particularly for spinning, weaving and processing industry. Its availability at regionally competitive price is important, he said.   He said industry is burdened with Rs.3.63/kilowatt-hour (kWh) surcharge on electricity in addition to gas infrastructure development cess (GIDC) on gas, “which cannot be passed on to the international buyers.”   “We were expecting that a reduction would be announced in this budget, reducing the electricity tariff to Rs7/kWh without levy of surcharges,” he added.

Aptma chief said the association proposed the government to equally consider re-liquefied natural gas and natural gas to ensure uniform price for industrial consumers (for captive and processing use) across the country. “The rate should not be more than Rs400/ million metric British thermal unit without GIDC.”

He regretted that the Federal Board of Revenue has rolled back all the claims of refund payment orders for the tax period from July 2016 onwards on the plea that the claimed amount eceeds certain bench marks.   Dar, in the budget speech, assured release of approved refunds. “This is not acceptable as three times more refunds are pending approval,” Fayyaz said.

He said the finance minister was also silent on Aptma’s proposal to allow import four million cotton bales without any incidence of taxes as cotton is short in supply in the country. Cotton is the major raw material and represents 80 percent the fiber mix in the textile products, predominantly meant for exports, he added.

The industry leader said no steps have been proposed to stop the misuse of duty and tax remission on export and other exemption schemes. Mis-declared, under-invoiced and smuggled goods, especially yarn from India, are making inroads into local markets through abuse of exemption schemes at the cost of domestic industry.  Mechanism should have been put in place to control the misuse of exemption schemes under statutory regulatory orders (SRO) 327 and 450 and control smuggling of fabric and garments as well as mis-declared yarn dumping.

Fayyaz reiterated that all the consignments of imported yarns from India, cleared vide the said SROs, should be subject to pre-shipment inspection certificate of SGS or other quality testing company and be mandated in letter of credit for yarn import from India for clearance under any exemption scheme.

Moreover, he added that all the samples of import consignments should have been subject to test by independent inspection agencies like SGS.

The Aptma chairman regretted that despite the fact that furnace oil, diesel and coal were zero-rated in 2016, but zero rating was no actually implemented due to the cumbersome procedures. “Zero rating of all inputs (in true spirit), including packing materials, spares, coal and HFO (heavy fuel oil) should be announced,” he said. “Finance minister is aware of this issue and should have addressed it in his budget speech.”    He further said indirect exports have been made eligible under long-term finance facility (LTFF) scheme. This will help increase in supply of basic textiles to the value-added sector. This facility was earlier available under the scheme of long term financing for the export oriented projects.

“The State Bank of Pakistan should have been advised to issue circular enabling new investment initiatives,” he added. “Furthermore, LTFF facility be also allowed for building of infrastructure for garment plants. This will encourage investment initiatives for garmenting projects.”

Fayyaz further added that increasing the minimum turnover tax will further hit textile mills which have been paying one percent turnover tax despite suffering losses. They have now been asked to pay 1.25 percent of the turnover tax, he lamented.