ISLAMABAD: The National Assembly Standing Committee on Commerce Tuesday directed the Federal Board of Revenue (FBR) to expedite approval of Cabinet to hold Statuary Regulatory Order (SRO) of March 7, 2025 in abeyance to keep metal sector in Export Facilitation Scheme (EFS) as majority of the industry is up in arms against the government decision.
Presided over by Jawed Hanif Khan, the Committee also accorded approval to extend the term of incumbent body of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) to synchronize its elections with the elections of other Chambers/Associations.
On the issue of exclusion of metal sector from the EFS scheme, FBR representative informed the Committee that the SRO was being grossly misused by the iron and steel sector due to which a loss of $ 300 million per annum is being inflicted on the national exchequer.
Iron, steel scrap importers: FBR withdraws EFS facility
However, in the light of Ministerial Committee a summary has been sent to the Federal Cabinet through circulation to put the SRO in abeyance.
However, some of the MNAs informed the Committee that a huge number of imported consignments are waiting for the decision of the FBR and the delay in decision is leading to them paying huge demurrage charges. One Member of Committee also hurled accusations of mistreatment of the steel and iron industry by the FBR.
However, Chairman Standing Committee poured cold water on the tense situation saying “we are not here to act as adversaries but to sort the issue amicably,”
FBR representative denied the accusations saying that the decision was taken after due consultation with industry and other government entities. He said, only ten industrial units have benefited from the scheme and others have misused it.
He said, in the new proposal, FBR has suggested exempting copper from duty and to impose duty on steel as value of export or re-export is less than imports.
However, one member of the committee stated that there is a perception that a few people from Gujranwala had been instrumental in taking the sector out of EFS.
Chairman Standing Committee directed FBR to consult with concerned Commerce Committee members and industry before finalizing any further course of action.
In a written reply to the Committee, FBR noted that the recommendation was conveyed to it on the direction of the Standing Committee meeting held on 27 February 2025. However, it is pertinent to note that prior to aforementioned meeting of Standing Committee, the Cabinet approved amendments to the Export Facilitation Scheme (EFS) on February 12, 2025, which included the exclusion of iron and steel scrap/metal from EFS. So in compliance with the Cabinet decision, the approved changes in EFS were subsequently notified by the FBR through SRO 301(1)/2025, of March 7, 2025.
The PM formed a committee on EFS, under Chairmanship of Minister for Planning, Development and Special Initiatives on 01.03.2025 with the following mandate: (i) assess changes to the EFS to determine whether they disproportionately favour imports over local supplies; (ii) evaluate the implications of these changes on domestic manufacturers of intermediate goods supplying to export sector, including impact on balance of payments; and (iii) propose actionable recommendations to address any identified anomalies in the EFS framework, ensuring alignment with domestic industry development and national export promotion objectives.
The Committee headed by Planning Minister, Ahsan Iqbal convened two meetings on 7th and 18 March respectively wherein the relevant stakeholders (including those from the metal sector) were invited to deliberate on issues concerning the EFS and also the impact of recent amendments on the metal and other sectors. The stakeholders from the metal sector attended the first meeting.
The Committee will firm up its recommendations and submit them for the consideration of the Prime Minister within two weeks. On the issue of extension in the term of FPCCI body, Secretary Commerce, Jawad Paul took the stance that Commerce Ministry will give its viewpoint to the Cabinet.
“The ministry will send the case to the Cabinet on the base of recommendations of Standing Committee but also present its own viewpoint,” he said, adding that FPCCI’s proposal maybe a “wish or desire” but Commerce Ministry does not agree with it.
He argued that in the case of extension in the term of one year to incumbent body the existing bodies of Chambers and Associations will not be able to exercise their votes for the election of FPCCI body.
The two-year term of existing body of FPPCI will expire in December 2025 whereas the terms of the other bodies will expire in 2026.
According to the press release, the Committee held a detailed briefing on the recent amendments to the Trade Organization Act, 2013, and the Trade Organization Rules, 2013. The briefing focused on the changes made to the tenure of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI). Representatives elected in 2024 were initially assigned two-year tenure; however, due to amendments, this tenure was reduced to one year.
The Committee noted that this was a sensitive issue as many chambers were involved. The FPCCI requested an extension of the tenure to align with the general chamber elections scheduled for 2026.
The Chairman emphasized the importance of honoring the legitimate expectations of the representatives, while the Secretary of Commerce explained that an exemption provision could temporarily address the issue, ensuring that the tenure of FPCCI representatives was not unfairly curtailed.
The Committee engaged in an in-depth discussion on how to resolve the issue of FPCCI’s tenure and whether it should be extended to align with the original two-year period. It was proposed that FPCCI’s tenure be extended by one year one time, through an amendment to the Trade Organization Act.
Additionally, the Committee discussed the impact of the Export Facilitation Scheme (EFS) on the metal and steel sectors. The scheme allows duty-free imports for export-oriented units but has faced issues related to misuse and discrepancies, particularly in the steel sector.
The Committee raised concerns over a recent SRO issued by the Federal Board of Revenue (FBR) on February 25, 2025, which sought to exclude the steel sector from the EFS facilities. The FBR clarified that the exclusion was part of efforts to curb duty evasion and other irregularities within the sector.
However, stakeholders stressed the need for further consultations before any final decision was made. The Chairman of the Committee expressed concern over more than 1,000 containers stuck at the port due to changes in the scheme, highlighting the immediate need for resolution.
The Committee proposed that the issue be resolved promptly and that consultations with stakeholders continue to ensure a balanced and fair outcome. The Committee also recommended that copper be exempted, while duty should be applied to iron and steel.
The meeting concluded with a decision to hold the exclusion of the steel sector from the Export Facilitation Scheme in abeyance until the Prime Minister’s Committee provides further recommendations. The chairman emphasized the importance of ensuring that the concerns of all stakeholders were heard and addressed before a final decision was made.
The meeting was attended by MNAs Muhammad Mobeen Arif, Usama Ahmed Mela, Dr. Mirza Ikhtiar Baig, Asad Alam Niazi, Muhammad Ahmed Chattha, Tahira Aurangzeb, Kiran Haider, Gul Asghar Khan, and Rana Atif in person, whereas Shaista Pervaiz attended virtually. Senior officers from the Ministry of Commerce, DGTO, FBR, and FPCCI were also present at the meeting.
Copyright Business Recorder, 2025
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