ISLAMABAD -  The government has notified export package incentive for eligible textile and non-textile sectors with objective to boost tumbling exports to curtail trade deficit of the country.

The Economic Coordination Committee (ECC) of the Cabinet on October 6, 2017, had approved a strategy to control the trade deficit by reducing imports and enhancing exports. Pakistan’s trade deficit had recorded at $9.01 billion during first quarter (July-September) of the current fiscal year FY2017-18 as against $7 billion during same period of the previous year showing an increase of 29.75 percent, according to Pakistan Bureau of Statistics (PBS). Imports had increased rapidly as compared to the exports. The exports had registered at $5.17 billion during July-September of 2017-18 as compared to $4.67 billion of the corresponding period of the last year showing a growth of 10.84 percent. Meanwhile, the imports had also shown an increase of 22.19 percent and recorded at $14.26 billion during first quarter of the current financial year as against $11.67 billion of the same period last year.

The Ministry of Commerce yesterday implemented the second component of the Trade Rationalisation strategy that was approved by ECC on October 6, 2017, by issuing the SRO on PM’s Export Enhancement Initiative improving upon the terms of the earlier scheme. The first of the three-pronged strategy was implemented by issuance of Regulatory Duties on imports of luxury and non-essential finished goods by FBR on Monday.

The main part of the trade strategy proposed by the Commerce Division was to improve the conditions of PM’s Export Enhancement Package which was modified in consultation with the exporters and the relevant ministries. The earlier package provided for conditional duty drawback scheme which would only allow such facility to exporters who export 10 percent more than the previous year. This made the competitive marketing difficult for the exporters, as any performance less than that would make the facility inaccessible. The exporters were demanding a continuation of previous year’s package which gave duty drawback facility regardless of the increase in exports.

Under the new version of the package, 50 percent of the rate of incentive for the eligible textile and non-textile sectors already announced in the PM’s package may be provided on the same terms as for the period January to June, 2017 ie without conditions of increment; the remaining 50 percent of the rate of incentive may be provided, if an exporter achieves an increase of 10 percent or more in exports as compared to corresponding period of the last year.

The SRO binds the State Bank of Pakistan (SBP) to clear the claims submitted by exporters’ bank within 48 hours. The banks on their part will not take more than 15 days to verify and submit the claims to SBP and will credit exporter’s account within 24 hours of release of funds by SBP. In order to encourage exporters to target new and far-flung destinations for exports, the package provides 2 percent additional Duty Drawback facility for exports to non-traditional destinations in Africa, South America, Oceana, CIS countries and Non-EU countries. The third component, Import Regulations, will be covered by issuance of amended Import Policy Order by the Ministry of Commerce which is also expected to be issued this week.