Textile division identified three pressing export impediments, including pending liabilities of Rs 115 billion with the Federal Board of Revenue (FBR), cost/ease of doing business and the levy of custom duty on import of cotton for failing to achieve targets.
The PM had directed the textile division to make a presentation covering tangible achievements, the reason(s) why the division has not been able to achieve its full potential, specific impediments in terms of man power policies, laws, rules, organizational structure, linkages, proposals to overcome the identified impediments and any pressing issues.
The division subsequently prepared a presentation and submitted it to the cabinet division as per the directives from the PM office and would be presented to the PM subject to his availability.
According to the presentation a copy of which is available with Business Recorder textile sector total liabilities with FBR are around Rs 115 billion including Rs 45 billion sales tax, Rs 9.22 billion custom duty drawback, Rs 25 billion PM package, Rs 32 billion to implement textile policy 2009-14 and Rs 3 billion textile policy 2014-19.
Textile division has proposed the payment of pending liabilities, incentivizing investment in machinery for export led industry, export diversification, import substitution, special rates for SMEs specially for ginning, power loom, garment stitching and facilitation for international business linkages and JVs.
Textile division has further proposed reduction in the cost of doing business across the textile value chain, i.e, electricity and gas prices. It has been proposed that tariff rationalization surcharge currently at Rs 3.10/KwH and financial surcharge at Rs. 0.48/KwH may be withdrawn.
According to the presentation RLNG depends on international prices and are currently at Rs 1,600 mmbtu while the system gas, available in Sindh and KPK, is at Rs. 488/mmbtu - Rs. 600/mmbtu. Disparity in gas price vis-à-vis system gas and RLNG has also emerged as a major issue.
The division has further proposed that ease of doing business may be promoted through one window facilitation and exchange rate.
The division has also proposed tariff rationalization of textiles value chain, international branding i.e. branding strategy and establishment of brand development scheme. Further e-commerce may be promoted through virtual trade fairs, business match making, E-product filing, online business analyses and digital marketing.
Textile division has also proposed introduction of latest seed technology, improving cotton staple length, up-gradation of ginning machinery, cotton standardization, introduction of hedge trading, research and development grant fund for new and existing markets, introduction of new fibers, new products and new blends.
Textile division has also proposed compliance fund, especially for environment and social, SMEs package which may include launching pad for SMEs in international markets, simplification of temporary importation schemes and simplification and achieving single window facilitation for regulatory organization.
Textile division enlisted several reasons for not achieving the targets which include lack of skills development, infrastructure, product and market diversification, compliance, cotton standards, cluster development, cost of doing business & ease of doing business, combined effluent treatment plant, revitalization of textile and garment cities, unnecessary import of textile goods, increase in cotton yield and production of long staple cotton, SME development, pending liabilities, tariff rationalization and regulatory regime.
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