One of the key budget proposals of the exporters is to restore utilisation period from 12 to 24 months of input goods consumed in finished goods to be exported under Duties and Taxes Remission for Exports (DTRE) Scheme as a major facilitative measure for the exporters in 2016-17.
Industry sources told Business Recorder on Sunday that exporters had a meeting with the Model Customs Collectorate (Exports) Karachi and Model Customs Collectorate Port Qasim Karachi to discuss possible restoration in utilisation period from 12 to 24 months under the DTRE Scheme. A joint proposal of the MCC Export Karachi and MCC Port Qasim has been forwarded to the FBR for consideration in the upcoming budget.
As now the budget makers are reviewing this proposal, it would be a major facilitative measure to enhance exports.
Exporters associations and trade bodies have strongly proposed to restore the utilisation period of input goods under the DTRE Scheme to 24 months instead of existing twelve months to the Federal Board of Revenue (FBR), which had negatively impacted exporters. Accusing the FBR of ignoring repeated requests, exporters termed the decision was irrational.
Both the relevant Collectorates as well as exporters had approached the FBR and the Commerce Ministry on the issuance of SRO601(I)/2012 in the budget (2012-13) which reduced utilisation period of input goods under the DTRE scheme. This SRO negatively impacted exports as manufacturers could not comply with reduced timelines for utilisation of raw material to be used in exports.
If the said SRO remained further operative, it would have serious implications on all major export industries, sources said. Keeping in view the seriousness of the issue and decision''s negative implications, impending since 2012, exporters of textiles, sports and food/vegetables have also been suffering because of the reduced period under the DTRE scheme. Export associations have repeatedly approached the FBR to plead their case. It is necessary that the FBR should withdraw SRO 601(I)/2012 to restore the utilisation period available prior to budget 2012-2013. Despite the fact that the Customs authorities had discussed and agreed to the proposal in a past meeting dated 27.11.2012, but the utilisation period was not enhanced. The possible enhancement in the period under DTRE in budget (2016-17) would be major relief measure for the exporters.
At present, input goods acquired under the DTRE scheme would be utilised in the manufacture and export of output goods within 12 months from the date of Approval of DTRE Application vide through SRO601(I)/2012, while it was 24 months before budget 2012-13, the FBR was reduced the utilisation period of input goods under the DTRE scheme.
Sources explained that exporters were already facing problems such as a lengthy approval process took 3-4 months including the export contract and opening of LC, right from processing to checking of files and physical visits of premises and then grant approval of only 25% of total applications in the first stage, while the remaining 75% after 1-2 month processing of determination of Input and Output Ratio by Input Output Co-efficient Organisation (IOCO) Karachi. The exports process has been completed within the remaining time period of 7-8 months. The lengthy period of the whole DTRE process starting from approval to final exports of goods is almost impossible to be completed in 12 months.
The FBR has now again reduced the time period of the consumption of the input goods under the DTRE Scheme which may create very serious problem for the exporters to ensure the exports of the finished goods within the curtailed period of One Year. It is practically not possible to complete the whole exercise in one year under the amended procedure laid down in the DTRE Scheme.
At present, the whole process of DTRE Scheme facility has following steps including contract with buyer; opening of L/C; application of DTRE; approval of DTRE up to 25 % of the applied quantity, determination of Input and Output Ratio by Input Output Coefficient Organisation (IOCO/EDB); process of approval of remaining 75% quantity, import of input goods; manufacturing of goods and then export of total quantity within the remaining 7-8 months in addition of various problems already existing like higher tariff of utility, lower quality of raw material, lack of modern technology and can''t replace their old machinery with latest machines due to high interest rate as compare to competitor are almost zero interest rate under the scheme concerned that cause high production. Shortage of gas supply, frequent prices changes in Cotton and Oil directly impact on raw material, law and order situation, cancellation of orders due to uncertainty & other factors prevailing in the country.
The reduction of utilisation period has direct negative impact on exporters. Due to unjustified changes, exporters bear further burden in the following shape: The exporters are already bearing delays because of gas and electricity outages. Due to this limitation, they are importing important raw materials, accessories, packing materials in short orders which ultimately increase the cost of purchase, delays in preparation of export shipment, shipment sent through air, and some exporter are losing buyers due to these delays, which ultimately suffer huge losses in exports due to various factors and it also adversely affect the foreign exchange remitted to national exchequer.
Exporters are also facing serious problems in process of extension in utilisation period of DTRE in concerned offices due to processing as well as legal issues. The powers to grant extension in utilisation period should retain with the FBR. This proposal would facilitate the exporters and mitigate their problems faced during day to day matters.
Export and Trade bodies also proposed to rationalise the parameter of value addition in DTRE scheme, the fixed 15% valued Addition in all industry is unjustified and illogical, margins are varying from industry to industry, this is not possible in practical that value addition will be fixed of 15% in all sector of industry keeping in view the nature of the industrial situation and behaviour.
Exporters have proposed FBR Chairman to incorporate the said DTRE related proposals in coming budget 2016-17.