ZAHEER ABBASI
ISLAMABAD: The government has been asked to provide fixed electricity tariff for five years and amend the Gas Allocation and Management Policy 2013 as immediate measures for survival of textile and clothing industry and achieving export-led growth.
Sources said that a presentation was made to Minister for Finance Asad Umar by All Pakistan Textile Mills Association (APTMA) in which immediate measures were proposed. The industry asked the government to fix electricity all inclusive tariff @ Rs 7/kWh for 5 years for export Industry on the lines of new agriculture tariff announced by Power Division and amend the Gas Allocation & Management Policy 2013 by according top priority to export industry (five zero-rated sectors). The government was also urged to provide system gas @ Rs 600/MMBTU to the export industry.
The measures to double exports of textiles & clothing included: (i) withdrawal of customs duty/sales tax on the import of raw materials (i.e. cotton & polyester) short in supply for industry consumption; (ii) liquidation of all textile industry refunds of sales tax, income tax, policy & package initiatives; (iii) permission for long-term finance facility (LTFF) to indirect exports and building of infrastructure for garment plants; (iv) extension in duty drawback scheme for 5 years to exports using indigenously produced materials and restoration of previous duty drawback scheme for gradual increase in drawback for garments & made-ups; (v) fast track establishment of Integrated Textile & Apparel Parks enabling plug & play facilities for local and foreign investors;(vi) and maintenance of market-driven exchange rate policy.
The finance minister was informed that textile is the energy intensive industry wherein its share has become more than 40% in the total conversion cost in basic textiles. Its availability at regionally competitive price is important for the entire value chain to compete in the international market.
The minister was further informed that 70% of the textile industry, including spinning, weaving and processing sub-sectors, is located in Punjab. The industry in Punjab is confronted with a serious crisis of competitiveness mainly due to strident rise in RLNG price which is dollarized and linked with international crude oil price. The Punjab-based industry is being provided expensive RLNG @ Rs 1570/MMBTU whereas industry in other provinces is given system gas @ Rs 600/MMBTU. The Punjab-based Industry cannot sustain this huge difference of 161% in gas price, the industry added.
The industry wants that in order to ensure sustainable gas supply to industry, it is requested to revisit Gas Allocation & Management Policy 2013 in the larger economic interest and to save export industry in Punjab from unbearable gas price disparity viz-a-viz rest of the country. In the existing Gas Allocation & Management Policy 2013 (revised in 2015), priority of industry is at number 3, therefore, it is proposed to amend the policy by creating new category of exporting Industry (5 zero-rated sectors) and according it top priority. This will enable utility company (SNGPL) to provide competitive energy to industry to become regionally competitive and overcome disparity in energy price for industry in Punjab viz-a-viz other provinces.
According to the industry, presently 30-35 % production capacity meant to produce exportable goods is closed, which is mainly in Punjab.
The industry stated that it is imperative that price and priority of gas supplied to different sub-sectors of the economy be extended in a way that exporting industry be given preferential priority in system gas allocation and supply. This will help revive US $2.5 billion closed export potential of industry as well as attract additional investment of estimated US $7 billion, which can produce exportable surplus of US $20 billion and 1.5 million additional direct jobs.
