The value-added textile sector is facing serious financial crisis, because more than Rs 205 billion of the value-added textile chain has been stuck up with the government.
The industry representatives said that the Federal Board of Revenue still withholds more than Rs.13 billion under Drawback on Local Taxes and Levies (DLTL) claims and about Rs.17 billion sales tax under refund claims, causing immense problems to cash-starved industry.
They said that the sector’s production could grow by over 80pc provided stuck up funds were released immediately. They said that the country has failed to improve its textile exports despite getting the status of GSP plus. The textile export fell by six per cent last month. On the other hand, India had provided full support to its textile sector, giving financial incentives and discount on the import of machinery so that the country could compete with Pakistani goods in the international markets.
India gave maximum incentives to its industry after Pakistan got the status of GSP plus, he said and demanded of the government to increase monetary support to the ailing sector.
PRGMEA Central Chairman Ijaz Khokhar said that millions of rupees refunds of ST and Customs Rebates payable to the exporters have been held up despite firm assurance by the govt that all refunds of the exporters would be cleared by Sept, 2014. He appealed to the government to issue instructions to the FBR for speedily releasing cheques against all the pending Sales Tax Refunds and Customs Rebate Claims to continue export earning process which is now on declining trend. He suggested the government to restore the ‘No payment no refund’ System for the value-added textile sector because collection of 2pc Sales Tax and then refunding is not only an exercise in futility but involves a large number of FBR personnel and precious time of FBR which can otherwise be utilised to bring more sectors in tax net to enhance revenue.
Ijaz Khokhar urged the government to allocate the export development fund to the Textile Ministry so that the fund could be utilised for development of export, as textile sector’s contribution to EDF stands at Rs.11.5 billion
Industry stakeholders said that though the FBR is releasing cheques against Refund Payment Orders (RPO) of 30th Jun 2014 yet the refund claims submitted after 30th Jun 2014, are pending while the major amount of the exporters is pending for the last five years and finance ministry is not giving instructions for clearance of these old pending claims, he added.
Vice chairman Malik Naseer lamented that the value added textile exporters are battling hard for their survival in the global market in the face of severe competition from neighbouring countries and struggling to meet export commitments despite most adverse factors. He also demanded of the government to provide gas to manufacturing units at lower rates so that they could compete globally.