The All Pakistan Textile Mills Association (APTMA) has put forward budget proposals for fiscal year 2016-17, seeking a special package for textile industry, withdrawal of gas infrastructure development cess (GIDC), Export Re-finance Facility (ERF) and Long Term Financing Facility (LTFF), liquidation of pending refunds, regulatory duty on import of synthetic yarns and fabrics, enforcement of strict regime to control smuggling of fabrics and garments, allocation of special fund for promotion of exports, provision of draw backs of local taxes and levies (DLTL) and specialised schemes including FMS, FPS, MLFPS, IEIS.
A budget paper sent to the federal government states that the export-oriented textile industry since last one and half year has been confronted with crisis-like situation, consequently exports of textiles have witnessed unprecedented fall in both quantity and value terms and the downward trend is still continuing.
It added that the PM had very kindly heard industry point of view, presented by APTMA in September 2015, and assured of giving textile industry package for its sustainability and growth. Some of the measures taken by the government have helped a segment of the industry in domestic commerce. However, initiatives concerning viability of textile industry to compete in the international marketplace are still pending for decision. APTMA is confident that once the viability of textile industry is restored by reducing cost of doing business, it will leave positive impact on textile industry's production, investment, employment and exports.
On the withdrawal of gas infrastructure development cess (GIDC), the APTMA has pointed out that imposition of GIDC on textile industry or at least from exporters over a specified threshold should be taken away completely. "It would not only save the export-oriented textile industry of the country but would also lead to further capacity closure, massive unemployment and further drop in textile exports," the paper added.
Regarding the Export Refinance Facility, he said the export-oriented textile industry should be extended the ERF facility to encourage exports of the entire textile value chain including yarns and grey fabric. Around 25 percent of the production of yarns and fabrics is currently surplus. The rate of Export Refinance and Long Term Financing Facilities should be further reduced by at least one percent to encourage exporters and fresh investment.
On pending refunds, it said all outstanding refunds of the textile industry pending on account of sales tax, both deferred and current should be paid back immediately to help liquidity of the mills to manufacture textile goods meant for exports. Similarly outstanding refunds of customs duty, income tax and textile policy initiative should be also paid to improve liquidity position of the industry.
Despite assurance by the Finance Minister still substantial amount of industry is blocked adversely effecting working capital. APTMA has demanded imposition of regulatory duty on the import of yarns and fabrics under various HS codes of chapter 55. This will also help exchequer to raise revenue.
Import of $1 billion worth of yarns and fabrics made from synthetic fibres at subsidised prices for consumption in the domestic commerce is adversely impacting the domestic industry. The size of the export is almost equal to the production of the industry producing yarns and fabrics made from synthetic fibres. Measures should be taken on war footing basis to strengthen domestic commerce by introducing Tariff/NT measures for countering informal trade and dumped imports. Textile goods and materials may be allowed to import duty-free for re-export under DTRE, Manufacturing Bond and Export Oriented Unit Schemes. DTRE Rules be amended and be made easy.
Textile industry being the export oriented industry contributing about 55 percent in export earnings be given its due importance and attention so that it can perform more efficiently and can earn more and more foreign exchange through exports. It is therefore proposed that government should allocate sufficient fund in the forthcoming federal budget for the year 2015-16 for the following schemes which were introduced in India and helping their exporters to earn more and more foreign exchange as compared to the quantum of the support.
Provision of DLTL at 5 percent to the entire textile value chain against exports be made to arrest falling textile exports. All competing countries have provided special incentives including duty drawbacks, focus market support and product support to their industry to lower cost of production to compete in the international marketplace.
Highlighting the specialised schemes including FMS, FPS, MLFPS, IEIS, it said objective of FMS is to offset high freight cost and other externalities to select international markets with a view to enhance India's export competitiveness in these markets. Scheme was started on 01.04.2006, for 57 notified countries with credit at 2.5 percent on FOB value of exports.
At present, there are total 125 countries covered under FMS wherein rate of benefit on FOB value is 3 percent for 76 notified countries and 4 percent for 49 notified countries. The duty credit scrip through which the incentive is disbursed is freely transferable. Such scrip's shall be eligible for the payment of Customs duty, Excise duty etc. The objective of FPS is to promote export of products which have high export intensity/employment potential, so as to offset infrastructural inefficiencies and other associated costs involved in marketing of these products. Scheme was started on 05.06.2012 with credit at 2 percent on FOB value of exports. The duty credit scrip through which the incentive is disbursed is freely transferable.
It said the export of product/sectors of high export intensity/employment is incentivized at 2 percent of FOB value of exports (in free foreign exchange) for exports made from year 2009 onwards. An import export code (IEC) holder is entitled for duty credit scrip at 2 percent on incremental export during the specified period. IEIS is region specific and covered exports to USA - Europe (50 countries) and Asia (41 countries) for the benefit for the specific period.