Federal Minister for Commerce Khurram Dastgir Khan Thursday said that despite diplomatic tension between Pakistan and India trade regime has not been changed. "The government is working to make every input items, including machinery import, zero rated for export sector from the next fiscal year while the proposed package for exports-oriented sector is still in field and may be announced anytime soon," the minister said while briefing the Senate Standing committee on Textile Industry which met with Mohsin Aziz in the chair.
The committee raised the issue that despite making all required payments, a huge quantity of raw cotton had been stopped at the Karachi port. Aziz urged that the government should instead ban the value-added products from the neighbouring country in a bid to protect the local textile industry.
The minister said the government has not banned cotton import from India while the target for cotton import ie 0.5 million bales through Wagah border has not yet exhausted, adding that Karachi port is open and there is no limitation for cotton import. Dastgir said the news about stopping cotton import through Karachi port is under verification, adding that the government has not issued any such letter/notification restricting cotton import from India.
The minister said that a meeting on the proposed package for exports-oriented sector held at the start of the current week as the government wants to facilitate it. However, he stated that exporters are regularly moving the goalposts. The government is supplying uninterrupted electricity, ensuring improved gas availability and has made the exports sector zero-rated; however, they moved to other demands, he said. He further said that the ministry is working on a proposal to declare the import of key inputs, including machinery, zero-rated for the exports sectors in the budget for next year and asked the stakeholders to give input in this regard before finalising the package. The minister also said that economic growth of the country is dependant on political stability. The Chairman Federal Board of Revenue (FBR) Nisar Muhammad Khan said that one of the major reasons behind the decline in exports and deteriorated situation of the industry is inefficiency. He said that the government has introduced five schemes to facilitate the exports-oriented sector while saying that only in the DTRE scheme the government is bearing a loss of around Rs 15-20 billion.
The FBR chairman said that all types of yarn, classified under PCT 5509.2100, 5509.2200, 5509.5100, 5510.1100 and 5510.1200 are subject to statutory customs duty @ 11% and concessionary customs duty @5% is available under SAFTA. The import of yarn has registered a decrease of 4% and 14% in terms of quantity and value respectively during the fiscal year 2015-16 as compared to fiscal year 2014-15, whereas import of fibre has also registered a decrease of 14% and 10% in terms of quantity and value respectively during the same period.
Moreover, in pursuance of a representation made by APTMA before the Chairman FBR in July 2016, the Directorate General of Customs Valuation, Karachi initiated a detailed exercise for determination of value of the said items under Section 25A of the Customs Act, 1969 in consultation with APTMA, Pakistan Yarn Merchants Association, and all other stakeholders. As a result of detailed deliberations, Valuation Ruling has been issued, as desired by APTMA and hoped that the new valuation ruling will address their concerns to a great extent.
The meeting was informed that local textile industry is in a dilapidated condition and its exports are on a declining trend due to a number of issues including high prices of gas and electricity, high tariffs on import of input materials for industries. Chairman Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) Ijaz Khokar asked the federal minister to clarify the government's position on textile package as they have to make deals accordingly. The minister replied that the package is still in the field and may be announced anytime soon. Khokar further said that DTRE scheme is benefiting only 3 percent industry, and there is need of a flexible input import policy comprising all four options that facilitate all including the SMEs.
The chairman FBR said the government is ready for considering any recommendation of the stakeholders to make the policy more flexible. The chairman PRGMEA said that the government as well as the committee needs to give special attention to garment sector, which is playing a vital role in country's exports. The committee asked the stakeholder to sit together and resolve their minor issues amicably while the committee is ready to hold separate meetings as well as for intervention for resolving their outstanding issues.
Mian Lateef from Chen One group told the committee that due to gas, electricity and high tariff issues 40 industries in Khurrianwala Industrial Estate are closed which resulted in a sharp decline in industrial sector exports and unemployment of 400,000. He said if the government resolves the issue of restructuring of bank loans of these industrialists, the units would be revived and it would help surge textile exports by about $3 billion annually and produce one million employment opportunities. He said the industrialists did not want their loans to be written off but they want to reschedule the loans so that they could revive their industries. The minister announced that the government is ready to facilitate rescheduling of loans for the revival of closed and sick textile units; however, it had to identify genuine and sustainable units. The industrialists should come up with a mechanism to separate the wilful and un-willful defaulters and also determine sustainable and unsustainable industries, he added.
The meeting decided to hold a meeting in Karachi to resolve the issue of banking sector with the textile industry; to which representatives from textile industry, State Bank of Pakistan, National Bank of Pakistan and private banks would be invited. Senator Nehal Hashmi pointed out that some industrialists were named in Exit Control List (ECL) and they were not even allowed to go abroad and meet with their clients. The committee recommended excluding the names of those industrialists from ECL.
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