ISLAMABAD: Government has released nearly Rs32 billion in cash support for promoting exports of textile and clothing in the last one and half years, officials told Dawn.
The massive support was doled out under the special prime minister’s package and textile policy for the sectors. Both measures helped accelerate the pace of growth, especially that of the value-added products.
Official figures show that the government has released Rs26bn cash subsidies under the package for the period January-June 2017 – the first six months of the package. No condition was attached with the cash subsidies paid out during this period.
The total claims received for cash payment stood at Rs34bn for the six months under review, leaving a balance of Rs8bn which is due to be paid to exporters.
For the outgoing fiscal year, government has received claims totalling of Rs11bn till June 2018. These claims will go up as the export proceeds are being received in the country, an official source said.
“We are expecting that the cash subsidy amount claims will go as high as to Rs60bn for 2017-18,” the source said. So far the government has released Rs2.5bn cash subsidy on export proceeds for 2017-18, leaving balance of Rs9bn.
Pakistan’s export of textile and clothing reached $13.53bn in 2017-18 as against $12.45bn over the previous year, reflecting an increase of 8.67pc. It shows that the cash subsidies partially picked up export proceeds from the sectors.
The growth pattern was much higher in the exports of value-added sectors — garments, knitwear and bedwear during the outgoing fiscal year.
Under the package, the cash support given in the form of duty drawback rates for textile garments stood at 7pc; textile made-ups 6pc; processed fabric 5pc; yarn and grey fabric 4pc. However, half of these rates were unconditional, while the rest was conditioned to show increase in the export proceeds.
An additional 2pc will be offered on export to non-traditional markets, which include 147 countries. However, no amount was gathered so far to show payment under this head.
The PML-N government in its budget extended the package of cash subsidy until 2021 but revised the rates downward.
Under the scheme, for textile garments, the rates were lowered to 4pc from 7pc; textile made-ups to 3pc from 6pc; processed fabric 2pc from 5pc, respectively.
Half of them were unconditional, while the remaining half was conditioned to showing increase in the export proceeds.
According to the textile policy, exports from the sector will reach $26bn by end 2019 from $13bn in 2016 – the year when the policy was announced.
However, the export figures show that textile and clothing exports are stagnant at the 2016 level.
In this package, the government has paid Rs2.69bn under the scheme of drawback of local taxes and levy for the period from 2014-17. The total claims received under this scheme are estimated to be Rs8.8bn.
Under the technology upgradation fund, an amount of Rs700 million was paid to exporters as part of the textile policy, with no remaining balance.
Published in Dawn, July 25th, 2018