Rs47bn cash subsidies given to export sectors

Updated April 25, 2020

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An amount of Rs45bn has been released to textile and clothing sectors between July-April. — AFP/File
An amount of Rs45bn has been released to textile and clothing sectors between July-April. — AFP/File

ISLAMABAD: The federal government has so far in the last three quarters released over Rs47 billion to the textile and non-textile sectors as cash subsidies under the PM’s Export Enhancement Package, a senior official told Dawn on Friday.

The figures reviewed by Dawn showed that an amount of Rs45bn was released to textile and clothing sectors between July-April under the drawback of local taxes and levies (DLTL). On April 6, the last tranche of Rs6bn was released for textile and clothing sector.

Under the package, the government had extended cash subsidy at the rate of four per cent for garments exports, 3pc on home-textile, and 2pc on processed fabric. Half of the cash subsidy is linked with 10pc growth proceeds from the previous year.

This amount paid as DLTL is in addition to the Federal Board of Revenue (FBR) payments of sales tax refunds and customs rebates. Under the PM Covid-19 Package, another Rs45bn have already been released to export-oreinted sectors.

An industry source said that exporters’ sales tax refund claims stuck with the FBR are around Rs6bn. Contrary to this, the federal government has released only Rs2.28bn as DLTL sectors since July 1, 2019 till to date.

On Friday, the commerce ministry released Rs828 million to the SBP for payments to non-textile sectors. Currently, the leather, footwear, carpets, sports, surgical instruments, and some machinery manufacturers are benefiting from the cash subsidies.

Talking to Dawn, PM’s Adviser on Commerce Razak Dawood said the non-textile sector, notably leather garments, engineering sector, and sports sectors, are performing well.

“We are in close coordination with them to promote their exports,” he said.

To a question, he said the commerce ministry did not discriminate between textile and non-textile sectors. The share of cash subsidies to the textile sector is higher because of their large share in total exports.

He said that Pakistan’s exports to Africa have increased by 10pc from July 2019 to April 21, as compared to the same period last year. This increase is largely because of the “Look Africa Policy” initiative.

He said that under the Initiative, rice exports have increased 20pc, from $500m to $600m, tractors from $9m to 15m, clothing from $4m to $50m, and bed linen from $30m to $36m.

The Africa policy was initiated by the commerce ministry in September 2017 under which top 10 countries of the 54 African nations were selected for trade promotions including Nigeria, Kenya, South Africa, Morocco, Algeria, Egypt, Sudan, Tanzania, and Ethiopia.

Pakistan’s total trade with Africa is $3bn or 0.3 per cent as against the continent’s total trade volume of $3 trillion.

Published in Dawn, April 25th, 2020