Budget upsets textile exporters for not including zero rated regime

KARACHI: The value-added textile exporters on Monday expressed dissatisfaction at Federal Budget 2021-22 for not giving enough relief as it did not incorporate proposals for restoring zero rating of GST, reducing withholding tax rate to 0.5 percent and suspending EDF surcharge.

Pakistan Apparel Forum Chairman Jawed Bilwani, Pakistan Hosiery Manufacturers & Exporters Association (PHMA) South and North Zone chairmen Tariq Munir, Faisal Mehboob Sheikh, Pakistan Knitwear and Sweater Exporters Association Chairman Rafiq Godil, and others addressed a joint press conference at PHMA House in this regard. They said imposition of 17 percent GST has made the textile exporters, especially SMEs financially unviable due to stuck up liquidity. They said it served no purpose and made them suffer throughout the year, making it difficult to fulfil export commitments, pay utilities and salaries to staff and workers, and to clinch new export orders.

“It is on record that 33 percent SME exporters have closed their export business as compared to last year due to imposition of 17 percent GST, which blocked exporters’ precious liquidity,” they said. To revive the SMEs they asked to restore the no payment no refund GST regime or to at least reduce the GST rate to five percent.

The value-added textile sector had also submitted a request to the government to reduce and fix tariff for electricity, indigenous gas and RLNG, which was not addressed.

They pointed out that though the government has allocated Rs20 billion for DLTL scheme, cases amounting to Rs32 billion were pending with the State Bank of Pakistan. “As per our calculation, government should increase allocation for DLTL scheme to Rs75 billion for clearance of backlog and new DDT / DLTL claims,” they said. They lamented that “no grants have been allocated for release of old refund claims of exporters, which amounted to billions of rupees”.

Participants of the press conference also disagreed that the budget was industry-friendly. They said that the government had raised the rate of sales tax on import of plant and machinery from 10 percent to 17 percent.

Raw cotton and ginned cotton would be chargeable at 17 percent, though earlier it was exempted. Moreover, they said, the government has introduced new draconian section 203(A) Power to arrest and prosecute according to which the Federal Board of Revenue (FBR) would have the power to arrest on their discretion.

Leaders said that it was an irony that despite approval by Prime Minster Imran Khan, Textile Policy 2020-25 has not been announced yet, which was spreading discontentment among textile exporters.

Exporters said that the PM’s vision to enhance the exports would only become a reality when the government provides “collectively policy and relief measures”. They were of the view that the exports should remain the government’s top priority as the backbone and lifeline of the country’s economy.