Pakistan government’s delay in announcing the proposed incentive package for the five zero-rated export sectors is hurting the basic textile sector more than others. Though the package has been finalised and is ready, but it is being delayed just because it has to be announced by the Prime Minister who cannot find time due to the ongoing political turmoil in the country. The industry feels exports must be given the same kind of importance that is being given to China Pakistan Economic Corridor (CPEC) related projects. They say these projects are almost on target despite strikes, agitation or sporadic terrorist hits in the country.

The package has much to offer all exporting sectors. The government has acceded to the demand of exporters to provide duty drawback of local taxes and levies they pay on buying inputs from the local market. It has fixed a drawback of four per cent on export of yarn and grey fabric, five per cent on export of processed fabric and six per cent on export of clothing. Half of this drawback will be provided in cash while the rest 50 per cent would be in the form of vouchers that could be cashed on import of textile machinery.

Earlier the industry had requested these vouchers should be adjusted against government taxes but it was turned down. The drawback rate for non-textile sectors will probably be five per cent. This step will improve the competitiveness of all five zero-rated exporting sectors.

Another concession granted is allowing refund of packing material purchased from registered suppliers. This facility was earlier denied when the five sectors were declared zero-rated last year. This will promote the domestic packaging industry and discourage packaging imports.