Expressing serious concern over the decline in textile exports, National Assembly Standing Committee on Textile Industry on Wednesday recommended cut in power tariff and provision of Liquefied Natural Gas (LNG) at "no loss no profit" basis to reduce cost of doing business. Federal Minister for Commerce Khurram Dastagir Khan while explaining his limited role in resolving exports-oriented sectors issues said that Commerce Ministry has limitations as it can only formulate policies but funds allocation authorities are others.
He stated this while briefing the parliamentary panel which met Muhammad Akram Ansari in the chair here on Wednesday. The committee also expressed serious concern over the stuck up sales tax refunds of exporters while saying it is one of the issue resulting in exports decline as exporters are facing serious liquidity crunch.
Dastgir said that the Federal Board of Revenue (FBR) has no predictable schedule for paying the stuck up refunds claims. There should be a predictable schedule for exports that they may know when to get their refunds. The minister said that power tariff is the major concern of the industry and it should be reduced. FBR official informed the committee that Rs 45 billion including Rs 12.912 billion deferred sales tax, Rs 13.76 billion fresh and Rs 17.92 billion RPOs of Textile sector is pending. Refunds of Rs 15.2 billion sales tax are expected to be paid by August 14, 2017.
Secretary Ministry of Textile Industry Hassan Iqbal said that government on Wednesday released additional Rs 4 billion against the exporter's claims, thus bringing the total releases to the textile sector under the Prime Minister package for exporters to Rs 7 billion. Secretary Textile said that Rs 40 billion would be disbursed among the exporters in the current fiscal year under the PM package.
Dastagir said that under the Rs 180 billion package for exporters, Rs 140 billion would be given to exporters in cash while Rs 40 billion would be given in shape of tax exemptions. Finance Minister has given the commitment in Cabinet meeting that amount releases against exporters' claims would be ensured. The committee also recommended registering the small textile units with the FBR and charging sale tax at 2 percent that they may get incentives as registered taxpayers.
The committee was informed that government charges 17 percent sale tax on their electricity bills and making the utility more expensive for them. To avoid the sale tax, the committee recommended for their registration with FBR which would also enabled them not to pay 0.4 percent on their bank cheque. Regarding the issues being faced by the textile sector and particularly by the value added segments, the committee stressed that appropriate measures should be taken.
The committee recommended that the federal government should provide electricity at subsidized rates to the small and medium level textile industry. The committee showed satisfaction over the improving situation of different projects going on under the umbrella of Lahore Garment City. The committee praised the revenue performance which has reportedly exceeded Rs 125 million over the period of last four years. However, the committee was informed that the city is facing gas connection issue on which Secretary Textile said that the matter has been raised and would be resolved soon.
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