PM's export package does not cover non-textile sectors

TAHIR AMIN & SOHAIL SARFRAZ

ISLAMABAD: Prime Minister's package for exporters notified by the Ministry of Textile Industry and Federal Board of Revenue (FBR) does not cover non-textile sectors -- surgical, sports, leather and carpets -- creating ambiguities among exporters.

Sources told Business Recorder here on Monday that Ministry of Textile Industry has allowed duty drawback from garments, home textiles, processed fabric, greige fabric and yarn manufacturers cum-exporters units under the Prime Ministers Package of incentives for exporters. According to the notification, the duty drawbacks under this order shall be allowed for exports on or after 16th January, 2017.

However, for other sectors including surgical, sports, leather and carpets, Ministry of Commerce has yet to issue a notification on duty drawback of local taxes in this regard.

In line with the decision of the Economic Coordination Committee (ECC) of the Cabinet, the Federal Board of Revenue (FBR) has issued three notifications which make the package effective from January 16, 2017.

FBR sources added that it has notified exemptions as per decisions communicated by the ECC which include exemption from customs duty and additional customs duty on import of 13 items from January 16, 2017 till June 30, 2018.

Sources said the FBR has also issued instructions to the Collectors of Customs of Model Customs Collectorates (MCCs) to grant exemption of sales tax on the import of textile machinery and duty exemption on the import of 13 items including cotton, artificial staple fibre and other items from January 16, 2017.

Textile units can claim exemption of customs duty on the import of (PCT Code 52.01) cotton, not carded or combed; (PCT Code 52.03) cotton, carded or combed; (PCT Code 5503.1100) of aramids; (PCT Code 5503.1900) other; (PCT Code 5503.3000) Acrylic or modacrylic; (PCT Code 5503.4000) Of polypropylene; (PCT Code 5503.9000) Other; (PCT Code 5504.1000) Of viscose rayon; (PCT Code 5504.9000) Other; (PCT Code 5506.1000) Of nylon or other polyamides; (PCT Code 5506.3000) Acrylic or mod acrylic and (PCT Code 5506.9000) other and (PCT Code 5507.0000) Artificial staple fibres, carded, combed or otherwise processed for spinning.

Through SRO 36(1)/2017, the Board has exempted sales tax on the import of machinery (not manufactured locally) by textile industrial units registered with Ministry of Textile Industry from January 16, 2017 till June 30, 2018. Zero per cent sales tax would be applicable on machinery, not manufactured locally, and if imported by textile industrial units registered with Ministry of Textile Industry, as specified in Part IV of the Fifth Schedule to the Customs Act, 1969, subject to same conditions as specified therein.

Chairman Pakistan Readymade Garments Manufacturers & Exporters Association (PRGMEA) Ijaz Khokhar told Business Recorder that there are ambiguities with respect to Prime Minister Package for exporters. He said that a letter has been sent to Secretary Textile for convening a meeting of Federal Textile Board to discuss the issues and remove ambiguities.

According to the Textile Ministry notification, drawback shall be available only to manufacturing cum exporters. The units availing the drawback shall be registered with the Ministry of Textile Industry. However, Khokhar said that the package should not be restricted to manufacturing cum-exporters and should be applicable to all categories of exports. It is difficult to show growth in exports during the next six months period as it would take time to avail the actual incentives announced by the government. However, the delay in release of sales tax refunds is already creating a liquidity crunch for the exporters, sources added.