Key Takeaways
- Textile and clothing exporters have called for structural reforms and temporary financial support.
- A high-level meeting chaired by Commerce Secretary Jawad Paul discussed industry challenges and policy interventions.
- Exporters seek a six to eight per cent drawback on local taxes and levies on total export sales.
Textile and clothing exporters in Pakistan have urged the government to introduce structural reforms and provide temporary financial support to address the sector’s downturn and protect Pakistan’s market share in international markets, according to a high-level meeting held on Tuesday.
The meeting, chaired by Commerce Secretary Jawad Paul, reviewed challenges facing the textile industry and possible policy interventions to restore export competitiveness. A source told Dawn that issue-based subcommittees had been constituted to examine the industry’s concerns and submit recommendations within 15 days.
At the outset, exporters called for structural reforms to address the rising cost of production and sought immediate relief through a six to eight per cent drawback of local taxes and levies (DLTL) on total export sales, conditional upon achieving a 10 per cent growth in exports.
The meeting was attended by officials from various ministries, including finance, power, petroleum, mines and minerals, the Federal Board of Revenue (FBR), the State Bank, and the Punjab Industries Department. Industry representatives included Pakistan Textile Exporters Association Patron Khurram Mukhtar, Chairman Reehan Naseem, Pakistan Hosiery Manufacturers and Exporters Association (PHMA) Chairman Syed Zia Alamdar, Pakistan Textile Council (PTC) Chairman Fawad Anwar, and representatives from the All Pakistan Textile Mills Association.
A major concern raised during the discussions was the industrial electricity tariff, particularly the burden of cross-subsidies that exporters said continued to undermine their competitiveness. Industry representatives highlighted a discrepancy of Rs56 billion in power tariff calculations, of which the Power Planning and Monitoring Company (PPMC) acknowledged Rs26 billion. It was decided that the matter would now be taken up with the Power Division during a meeting scheduled for Friday (Oct 16).
The commerce ministry was asked to submit recommendations to the prime minister for a final decision. Exporters also questioned the methodology used to calculate gas tariffs, particularly the treatment of unaccounted for gas losses, which they said added to industrial energy costs.
Another major issue concerned anomalies in the Export Finance Scheme (EFS), including differences in rates, inadequate allocation of funds to the corporate sector, and the failure of certain commercial banks to implement the prescribed fixed financing rate of 4.5 per cent. The industry representatives sought corrective measures to ensure that export financing remained accessible at competitive rates, particularly at a time when exporters were facing rising production costs and weakening demand in overseas markets.
The meeting also dwelt on delays in tax refunds and other taxation issues involving the FBR, which exporters said had heightened liquidity pressures and constrained their ability to finance export orders. On labour-related expenses, the industry representatives informed the meeting that the overall human resource cost had reached $270 per worker, placing an additional burden on manufacturers.
