Pakistan urged to reduce gas, power tariff on textiles

The Federation of Pakistan Chambers of Commerce & Industry (FPCCI) has urged the Pakistan Government to reduce the tariff rates on natural gas and power used by the textile industry at par with regional rivals to make the country’s export competitive in global market. At present Pakistan’s cost of production is PKR 3/unit higher than its competitors.

 FPCCI vice president Saquib Fayyaz Magoon urged Pakistan’s finance minister Muhammad Ishaq Dar and Ministry of Textile Industry (MOTI) secretary Hassan Iqbal for this step at a recent meeting with the latter at the chamber’s headquarters in Karachi, the organisation said in a press release.
 
Magoon said the textile industry is burdened with PKR. 3.63/KWH surcharge on electricity and gas infrastructure development cess (GIDC), which could not be passed on to the international buyers.

The PKR 180 billion package announced by the prime minister in January 2017 was a non-starter as it had restricted its monetary incentives to only those exporters that would show a 10 per cent increase in their export revenue with effect from July 1 this year compared to last year, he said.
 
“However, under the present scenario of a long outstanding – sales tax-refund culture, there is a little likelihood of a 10 per cent increase in export as exporters are compelled to borrow to meet their liquidity requirement, which in-turn adds to their input cost,” Magoon added.
 
Expressing concern over the rebate to export of yarn, a basic raw material for the weaving industry, he said spare parts of textile machinery should also be allowed to be imported at zero rate just like the machinery as these parts are finally sold to the textile industry.
 
Former FPCCI vice president Waseem Vohra said gas tariff in Pakistan is $7.65/unit compared to $4.5/unit in India, $4.20/unit in Vietnam, and $3.10/unit in Bangladesh. The tax on exports in Bangladesh is levied at 0.25 per cent whereas in Pakistan, the rate is 1 per cent, which, after including indirect taxes and other levies, comes to 11 per cent of cost of exports, he said. Vohra reiterated that the higher cost of production in Pakistan is one of the main causes of export slide.