RECORDER REPORT

KARACHI: The Value-added Textile Exports Association Wednesday demanded of the government to restore zero rating - no payment no refund system – and continue with Duty Drawback of Taxes (DDT) & Technology Upgradation Fund (TUF) scheme and duty-free import of cotton yarn in the forthcoming budget for 2021-22.

Addressing a joint press conference, the textile sector representatives also demanded reduction of withholding tax rate to 0.5 percent, suspension of EDF surcharge, reduce and fix tariffs of electricity, gas & RLNG to support the country’s largest exporting sector.

They were of the view that the exports must remain top priority of the government as it is the lifeline of economy deserves government's continuous support. If the government assures to extend the deserving support to the value-added textile export sector it has the capacity to achieve the milestone and pledges to enhance its exports by 30 percent and will reach at $20 billion in FY2021-22 and will increase by 25 percent every year onward 2022-2023 resulting to surplus trade of Pakistan, more foreign exchange earnings & additional employment.

Zubair Motiwala Chairman, Council of All Pakistan Textile Mills Associations, Jawed Bilwani Chairman, Pakistan Apparel Forum, Tariq Munir Chairman Pakistan Hosiery Manufacturers & Exporters Association, Rafiq Godil Chairman Pakistan Knitwear and Sweater Exporters Association, Feroze Alam Lari Chairman Towel Manufacturers Association of Pakistan, Abdus Samad Chairman Pakistan Cloth Merchants Association, Zulfiqar Chaudhry Chairman All Pakistan Textile Processing Mills Association, Shaikh Shafiq Former Chairman Pakistan Readymade Garment Manufacturers & Exporter Association, Khawaja M. Usman Former Chairman Pakistan Cotton Fashion Apparels Manufacturers & Exporters Association, Amin Allana Chairman All Pakistan Bedsheets & Upholstery Manufacturers Association, Yusuf Yaqoob Chairman Pakistan Weaving Manufacturers Association participated in the Joint Press Conference held at PHMA.

The Chairmen of the Value Added Textile Exports Associations apprised that they have submitted Budget Proposals to the Federal Government wherein the top demand is to restore Zero Rating on GST i.e. “No Payment No Refund Regime" through revival of SRO 1125 in letter & spirit as SME exporters have been closed down and decreased by 30 percent as compared to last year due to imposition of 17 percent which blocked exporters precious liquidity.

They were of the view that the textile exporters are optimistic and hopeful that the federal government in the Federal Budget 2021-22 will seriously consider and accept their demands, proposals and recommendations in the larger interest of the sector.

Industry representatives also highlighted that despite COVID19, the textile exports have increased by 17.35 percent as compared to last year and will touch $ 15.50 billion end of this fiscal year owing to incumbent government's policies, payments of Drawback of Local Taxes & Levies (DLTL)/Duty Drawback of Taxes (DDT), special/competitive tariff and uninterrupted supply of utilities.

Previously, due to commencement and payments of DLTL Scheme in 2009, the Textile Exports have increased by 7.3 percent in 2010 and by 35 percent in 2011. However, in 2012, textile exports were decreased by 11 percent due to withheld payments of DLTL. Therefore, it is most crucial that the government must continue the DDT scheme for the next five years. They demanded that Duty Drawback of Taxes on Garment, Home Textile & Fabric exports should be provided @ 7 percent, 6 percent& 5 percent respectively on shipment basis for next five years to compete in the international market as competing countries.

Further, Incremental DDT, on an increase of 10 percent exports over previous year, should also be provided @ 2 percent. This will bring huge investments in textile sector and shall encourage new-comer exporters to invest in textile sector.

They said that with the introduction of Technology Up-Gradation Fund (TUF) scheme in 2009, some 30 percent capacity of textile sector has been enhanced. Therefore, it is imperative to reinstate TUF Scheme for next five years. This will bring up-gradation and advancement in technology leading to production enhancement as well as exports.

They mentioned that Export Development Fund (EDF) Surcharge Collection is approximately Rs9 billion annually. They demanded to the government to suspend collection of EDF till unutilized amount of already collected Rs58 billion.

Exporters fall under final tax regime and required to pay 1 percent WHT of their export proceeds, it should be reduced from to 0.5 percent for exporters as this would also help the exporters in using the cash liquidity for enhancement of the exports, they demanded.

To compete in the internationally and capture more markets, it is crucial that tariff of electricity, Gas and RLNG for exporters should be fixed at 7.5 cents/kwh,Rs819/MMBTU and $6.5/MMBTU respectively for next five years and the same should be applied countrywide.

Owing to historically low cotton production in the country and severe shortage of cotton yarn, on demand of the Value-Added Textile Sector, government has allowed duty free import of Cotton Yarn till 30th June, 2021. The duty-free import of cotton yarn should continue until Pakistan's cotton production reaches to 14 million bales, they suggested.

They recommend that permission for import of raw materials and intermediate goods for manufacturing of finished goods meant for export under Duty & Tax Remission for Exporters (DTRE) should be automated and allowed to registered textile exporters through the Ministry of Commerce Textile Industry's RDA Cell.

The value added textile exports contribute to around 62 percent in total exports, provides 42 percent urban employment particularly to female workforce which mostly is widows and orphans, earns highest foreign exchange and supports approx. 40 allied industries.