LAHORE -  Pakistan Hosiery Manufacturers and Exporters Association (PHMA) Chairman Adil Butt has welcomed the government decision to reduce sales tax from 2 percent to 1 percent on raw material supplies for five export sectors in the final approval of budgetary proposals for 2017-18 by the National Assembly.

However, he showed serious concerns over meagre allocation of funds for duty drawback claims to exporters under the prime minister’s export package, as only Rs4 billions are being released to exporters against total claims of over Rs24 billion. “When reservation was raised during the sixth meeting of the Federal Textile Board last week, Finance Division officials assured the textile exporters that funds would be released for duty drawback from allocations under federal budgets as well as supplementary grants based upon the claims submitted in the State Bank of Pakistan.” But no such commitment was fulfilled in the final approval of federal budget 2017-18, he regretted.

Adil said that their major portion of working capital was stuck up with the FBR, as the textile exporters had not received their drawback of Local Taxes and Levies (DLTL) either outstanding for the last many years. He said the textile industry will remain unviable in case the government fails to return local taxes and levies on exports. He urged the government to act decisively and rescue the value-added textile industry from financial crisis, as worst-ever cash flow crunch had brought the country’s largest industry to the verge of disaster.

He urged Prime Minister Nawaz Sharif to intervene and direct the FBR to make payments without any further delay. He said that only the immediate payment of all outstanding refunds of sales tax against the already issued RPOs could save the industry.

He suggested the government that duty drawback of taxes, announced under the PM’s package till June 30, 2017 should be extended up to at least June 30, 2018. He proposed the government to release funds to the central bank for immediate payment of duty drawback of taxes to the hosiery exporters.

He lamented that value-added textile exporters were battling hard for their survival in the global market in the face of severe competition with the regional countries. Terming funds blockage as main cause of continuous drop in exports, he said that export industry was unable to tap its potential in accordance with capacity.

Adil also asked the government to ensure 24 hours power supply to the export industry which is presently facing 10 hours loadshedding, forcing the industry to operate just one shift. Moreover, he requested to resolve the issue of energy tariff differential with regional countries and even within the country. He said that export industry was the life line of economy and any disruption would have devastating impact on the industry causing productivity loss, job losses and industrial unrest.