Commerce ministry releases Rs2.5 billion under DLTL

ISLAMABAD: Ministry of commerce has released Rs2.5 billion under drawback on local taxes and levies (DLTL) in line with the longstanding demand of industries that are facing liquidity crunch due to unsettled funds, commerce adviser said on Friday.

“MoC [ministry of commerce] has released Rs1,154 million for the non-textiles sector and Rs1,346 million for the textiles sector, a total of Rs2,500 million under DLTL schemes,” Adviser to Prime Minister for Commerce and Investment Razak Dawood wrote on Twitter.

“Hope this will resolve the liquidity issues of our exporters and enable them to enhance exports,” Dawood added.

Textile sector that accounts for over 60 percent of the country’s exports has been calling for release of stuck refunds and rebates to get out of liquidity crunch.

Analysts said the government is showing sense of economic management by trying to meet the demands of businesses. Recently it removed duties on cotton and cotton yarn imports to reduce gap in demand and supply in the local markets. Textile exports increased 9.1 percent to $11.4 billion during the first nine months of the current fiscal year. Textile exporters want the government to allow duty free import of cotton yarn till time the government achieves its set cotton production target of 10.5 million bales.

“To ease down the cotton yarn availability crisis, it is also imperative that to also place ban on export of cotton yarn from Pakistan or impose 10 percent duty on export of cotton yarn from Pakistan and take necessary steps and measures to import cotton yarn safely from Central Asian Republics through land route by activating all the transit trade agreements signed with regional countries as the sea route is taking prolong duration due to shortage of containers and vessels,” Pakistan Hosiery Manufacturers and Exporters Association said in a statement.

Nontextile sector is still struggling to turn as beneficial as textile sector is seen during the pandemic tumult. Textile businesses have received export orders for six months with the sector expanding production capacity to meet robust demand from foreign buyers. The growth was despite the global economic slowdown caused by the pandemic-related lockdown and waning consumer demand. However, the government’s decision to keep businesses open is leading to benefits of orders diverted from closed economies, while US-China rift is also diverting orders to Pakistan. Nontextile exports fell 4.3 percent to $7.3 billion during the nine months of the current fiscal year.

With influx of inflows of foreign debts, the government has been able to improve external account. However, it still needs to improve exports.