PTEA wants 6-8pc DLTL support tied to 10pc rise in exports
MUSHTAQ GHUMMAN
ISLAMABAD: Pakistan’s textile exporters have sought temporary Drawback of Local Taxes and Levies (DLTL) support of 6-8 percent, linked to a 10 percent increase in exports, as part of a broader package of structural reforms to address rising production costs and arrest the decline in exports.
The demand was raised at a meeting convened by the Ministry of Commerce on October 13 following the Pakistan Textile Exporters Association’s (PTEA) warning on October 7 about declining textile exports and domestic commerce and its call for urgent measures to restore the sector’s competitiveness.
The meeting was co-chaired by Commerce Secretary Jawad Paul and Rana Ihsaan Afzal Khan, Coordinator to the Prime Minister, and attended by officials from the Ministries of Finance, Power, Petroleum and Maritime Affairs, the Federal Board of Revenue (FBR), State Bank of Pakistan (SBP), Punjab Industries Department and other stakeholders.
PTEA was represented by its Patron-in-Chief Khurram Mukhtar and Chairman Reehan Naseem.
Other participants included Syed Zia Alamdar, Central Chairman of the Pakistan Hosiery Manufacturers and Exporters Association (PHMA); Fawad Anwar, Chairman of the Pakistan Textile Council (PTC); Rehman Naseem and Aamer Fayyaz of APTMA; Javed Bilwani, former Chairman of PHMA; Ijaz Khokhar, Patron of PREGMEA; and Muzzammil Hussain, Secretary General of the Textile Mills Association (TMA).
According to industry representatives, the meeting examined a range of issues affecting export-oriented industries, including high energy tariffs, taxation, financing constraints, logistics bottlenecks and rising labour costs.
The exporters proposed temporary DLTL support equivalent to 6-8 percent of total export sales, conditional on achieving 10 percent export growth, to help absorb exceptional cost pressures and protect Pakistan’s existing international buyers and market share.
A major issue discussed was an alleged Rs56 billion anomaly arising from cross-subsidies embedded in B3 and B4 industrial electricity tariffs. The Power Planning and Monitoring Company (PPMC) acknowledged Rs26 billion of the amount during the meeting, according to industry representatives.
A follow-up meeting with the Power Division has been scheduled for October 16. The Ministry of Commerce has directed the relevant authorities to reach a final conclusion so that the matter can be placed before the Prime Minister for a decision.
The exporters maintained that high electricity and gas tariffs, coupled with taxes and cross-subsidies, were eroding Pakistan’s competitiveness against regional suppliers and making it increasingly difficult for domestic manufacturers to offer internationally competitive prices.
On gas pricing, the industry challenged the calculation of the applicable levy and the Unaccounted-for-Gas (UFG) component, arguing that these charges were adding to the cost burden on export-oriented manufacturers.
The exporters appreciated the Federal Minister for Maritime Affairs and his team for reducing domestic logistics costs within a short period and improving port efficiency. However, they highlighted the inadequate availability of train services from major industrial centres in Punjab, including Faisalabad, Lahore and Multan, along with high ocean freight charges, lengthy transit times and operational problems at transshipment hubs.
Freight rates to major international destinations have increased by 1.5 to 2.5 times in some cases, substantially raising the landed cost of Pakistani products, the industry representatives said.
As a result, exporters face the difficult choice of absorbing additional costs and accepting lower profit margins or passing them on to overseas buyers, potentially losing orders to competing sourcing destinations.
They warned that international buyers increasingly assess suppliers on price, reliability, delivery schedules and the overall business environment. Once orders shift to competing countries, recovering those buyers could prove difficult.
The meeting also examined anomalies in the Export Finance Scheme (EFS), including pricing issues, inadequate allocations for the corporate sector and the alleged failure of certain banks to implement the prescribed 4.5 percent end-user financing rate.
While acknowledging the increase in the EFS ceiling, the industry maintained that inconsistent implementation was leaving some exporters with higher financing costs. The announced rate is intended to remain applicable until June 2027.
Exporters also raised concerns over delayed tax refunds, saying that the withholding of refunds was tying up working capital and constraining their ability to purchase raw materials, finance production and fulfil shipments.
They called for timely refunds and consistent implementation of financing arrangements to ensure that export-oriented businesses could meet their working-capital requirements at competitive rates.
Another issue concerned rising labour-related expenses, with the industry estimating the all-inclusive human resource cost at $270 per worker.
To simplify compliance and improve transparency, exporters proposed a deduction of 0.10 percent on export and domestic sales in lieu of existing contributions and obligations relating to the Employees’ Old-Age Benefits Institution (EOBI), provincial social security institutions, the Workers’ Profit Participation Fund (WPPF), the Workers’ Welfare Fund (WWF) and the 10C bonus.
According to industry, the proposed arrangement would reduce administrative costs, discourage non-compliance and improve transparency in the payment of labour-related obligations.
The exporters also called for greater predictability in regulatory, taxation, customs and energy-related policies. They argued that abrupt policy changes, holidays and compliance requirements introduced without adequate notice could disrupt production, delay shipments and undermine commitments to international buyers.
They urged the government to provide reasonable advance notice and transition periods for regulatory changes and to ensure that holiday arrangements for export-oriented industries took into account international production and shipment schedules, particularly during peak export seasons.
Following detailed discussions, the government and industry stakeholders agreed to constitute separate sub-committees to examine the issues confronting export-oriented sectors and recommend corrective measures.
At PTEA’s request, the committees will complete their exercise and submit concrete recommendations within 15 days.
The exporters stressed that temporary relief alone would not address the underlying cost disadvantages facing the textile industry. They called for permanent structural reforms covering energy pricing, taxation, export financing, logistics and labour-related compliance to protect Pakistan’s export base, retain established buyers and improve its competitiveness in international markets.
Industry representatives described the meeting as productive, saying that stakeholders had deliberated at length on the issues raised and that other participants had also supported the industry’s position.
