Textile stakeholders have been left disappointed with the recent budget unveiling, calling it insufficient and inadequate to address the sector’s woes. The major demands of the All Pakistan Textile Mills Association (APTMA) have remained a wish-list as the expected relief in rising cost of production and pending sales tax issues still remains elusive.

Recall that major proposals by the body included addressing energy tariffs in particular. APTMA had called for decreasing the electricity tariffs from Rs11/kWh to Rs7/kWh, citing the Rs3.63/kWh tariff equalization surcharge as unjustified.

But this was expected given the commitments provided by the government to the IMF given the limited fiscal space that is now available. Then there is the provision of expensive gas to Punjab at a rate of almost Rs1300/mmBTU that has resulted in a further increase in already much higher cost of production as compared to regional competitors.

If textile exports are to be increased, the cost of doing business has to be rationalized to give textile exporters a level-playing field to compete for market share. On the other hand, the liquidity issue has also become a pressing one especially for small to medium sized manufacturers who are in many cases unable to process orders due to shortage of cash-flow.

Industry sources claim more than Rs200 billion is stuck in pending sales tax refunds with companies still waiting for over two years to have these cleared. The government has claimed to have these processed in “phased manner over the next twelve months starting 1st July 2018”, according to the budget document. But textile stakeholders remain skeptical.

The government has however announced moving towards zero rating of import materials for the export sector in order to try to reduce creation of new refund claims. Zero-rating of the textile sector has extended while enhancing cotton production and quality has also been focused upon.

As far as allocations go though, the government has skipped out on the tech up-gradation fund for the textile sector. Miftah Ismail mentioned that the government is working on a new package to improve exports but it remains to be if the government even gets a mandate implement it. Besides the Rs180 billion PM textile incentive package would have been good enough too had it been implemented in a proper manner.