ISLAMABAD: Commerce and textile ministries have urged the Ministry of Finance to allow the continuation of an unconditional cash subsidy on exports in 2017-18 under the prime minister’s Rs180 billion support package.
“We have approached the finance ministry several times for a policy change,” an official source in the commerce ministry told Dawn on Monday.
The prime minister announced on Jan 11 a subsidy package of Rs180bn to boost exports.
The package promised the unconditional cash subsidy in the first six months (January-June). Exporters agreed to avail the same subsidy by achieving an incremental increase of 10 per cent in export proceeds in 2017-18.
Pakistan’s overall exports fell 1.63pc to $20.45bn in 2016-17 from $20.78bn in the preceding year.
Data shows that results of the premier’s export package in the first six months do not support the continuation of the unconditional cash subsidy in the current fiscal year.
In January-June, export proceeds stood at $10.54bn against $10.48bn over the corresponding period a year ago. This means no tangible growth took place in exports in the second half of 2016-17.
According to the official source, the finance ministry has so far released Rs4.5bn against claims submitted by exporters under the support package. Total submitted claims were of more than Rs15bn, the official said, adding that the remaining amount would be released soon.
The finance ministry expects to receive claims in the range of Rs30bn and Rs35bn for the first six months of the package. The total amount of subsidy projected for the first six months was Rs60bn. The government projected Rs120bn in the cash subsidy for 2017-18.
The official source said exporters are not willing to honour their commitment about claiming the subsidy in the case of an incremental increase in export proceeds. “We are trying to convince the finance minister to change his policy and continue the package on the pattern of the first six months.”
According to the official, no final decision has been taken so far in this regard.
Under the package, the government offered a 7pc rebate in the shape of cash support on the exports of all types of garments and 6pc on those of home textiles. The rate of cash support is 5pc for fabric exports and 4pc for yarn and grey fabric exports.
For non-textile sectors, the package offered cash support of 7pc on the exports of finished leather goods, including garments, and 5pc on those of finished leather.
It offered cash support of 7pc on the exports of sports goods, 5pc on cutlery and surgical instruments and 6pc on carpets.
Customs duty and sales tax on the import of raw cotton have been abolished. The duty on manmade fibre imports has been waived. A 10pc sales tax on textile machinery imports has also been done away with.