ISLAMABAD: While urging quick decisions to arrest the sliding export patterns, textile leaders on Thursday asked Finance Minister Muhammad Aurangzeb to order the prompt release of pending refunds of Rs329.5 billion.
A delegation of the All Pakistan Textile Mills Association (Aptma), led by Chairman Kamran Arshad, apprised the finance minister of the challenges confronting textile exporters and called for their early resolution.
Mr Arshad briefed the minister on pending refunds and sought policy steps to resolve the textile sector’s difficulties connected to taxation, energy, and finance.
He said the association’s recommendations should be incorporated in the upcoming budget.
Urges govt to incorporate its recommendations in upcoming budget
The industry leaders were dissatisfied with the delayed refunds across eight categories, which caused a huge liquidity crunch. Of the overall outstanding refunds amount of Rs329.5bn, a significant portion is deferred sales tax of Rs105bn, followed by Rs100bn in income tax, Rs55bn in sales tax, and the remainder in other categories.
They regretted prolonged delays in refund payments, which had eroded trust in the government and diminished confidence in new programmes, given the substantial unpaid dues.
During the meeting, three demands were made to make the textile industry competitive and reverse the deindustrialisation in the spinning sector. They demanded the restoration of zero-rating on locally produced raw materials and inputs for exports under the Export Facilitation Scheme (EFS).
The EFS should be restored to the level of June 2024. Aptma demanded an 18pc sales tax on the import of all raw materials under the EFS. The Pakistan Textile Exporter Association had demanded that the scheme’s scope be expanded to domestic trade, reducing the consumption period to one year.
Aptma also demanded that enterprises or commercial importers that do not contribute to exports should be excluded from this scheme.
The minister was told that expensive energy is a major irritant that is hurting the competitiveness of yarn, cloth, and overall textile/manufacturing exports. It was pointed out that energy is 35-55pc of conversion costs in upstream segments in Pakistan, compared to less than 20pc in competing economies.
Aptma demanded that the industry be supplied electricity at 9 cents/kWh and gas at $9/mmBtu to become internationally competitive.
The association demanded the procurement of 35 new domestic gas discoveries through competitive bidding under third-party access. It also demanded permits for exporters to import LNG directly. Aptma can import and transport LNG through 3rd party access at an ex-delivery price of $9/mmBtu.
The association also demanded the removal of Rs100bn cross-subsidy from industrial power tariffs.
Aptma also sought B2B power contracts with reasonable wheeling charges. It further said that the wheeling charge should be finalised at Rs5/kWh cost-of-service, excluding legacy costs of the grid unrelated to B2B consumers.
An official announcement from the finance ministry said that Mr Aurangzeb has reiterated the government’s unwavering commitment to resolving critical issues related to taxation, energy, and financing, as part of its efforts to ensure the long-term viability and future growth of Pakistan’s industrial sector.
Published in Dawn, March 7th, 2025
