Pakistan's upcoming Union Budget will have relief for the textile sector. The Ministry of Textile wants the restoration of zero-rated sales tax regime for the sector. Pakistan feels the rising labor cost in neighboring countries, including India and Bangladesh, will provide it an edge. In 2005, the no-payment no-refund system was introduced and it not only generated much revenue but stopped fake refunds. Textile exporters have been assured their pending sales tax refund claims will be cleared soon.
Exporters say they are facing a liquidity crunch. They recommend that all refunds should be reimbursed to exporters at the time of export proceeds realization, separate status and top priority be given to export-oriented industries in the supply of power and gas as well as water, and that the textile policy be implemented in letter and spirit.
There is a proposal to transfer the Export Development Fund, which is received from the textile sector, to the ministry of textiles so that it could be spent on research and development. The Ministry of Textiles wants the sector to develop more value-added textile products, which will enable it to tap the international market.