ECC approves Rs51 bn package to boost exports

ISLAMABAD: The Economic Coordination Committee (ECC) of the federal cabinet under chairmanship of Prime Minister Shahid Khaqan Abbasi on Wednesday approved additional net package of Rs51 billion for providing cash support and slashing down electricity tariff for boosting the country’s exports during next three years.“The overall package will provide incentive to the tune of Rs65 billion, including cash incentive of Rs41 billion, Rs10 billion for industrial support in electricity, Rs12 billion zero-rating packaging material and Rs2 billion import duty waiver, on 255 tariff lines of raw material,” top officials of the Ministry of Commerce told The News after the ECC meeting.The ECC approved extension of Prime Minister’s Export Package for the next three years i.e. up to June 30, 2021. The package aims at improving the competitiveness of the textile and non-textile export sector to continue the export growth in the coming financial years.The PM’s Export Package was initially approved in January 2017 for a period of 18 months i.e. till June 2018. The package has vitally contributed towards the turnaround in exports in FY-2018 which had been continuously declining since FY-2014. During the first 10 months of the current financial year i.e. July-April 2017-18, the exports have registered an increase of 14 percent compared to the corresponding period of the previous year. It has contributed additional $2.3 billion foreign exchange earnings during this period. The additional gains are estimated to be around $2.7 billion by the end of the financial year 2017-18.Therefore, in order to maintain the growth momentum in exports, the ECC has extended the package for the next three years with improvements. In order to improve competitiveness and incentivise investment in export-oriented production, the Drawback of Local Taxes and Levies (DLTL) has been extended, on the same terms and conditions, for the commercial and manufacturer exporters. The zero-rating of textile machinery imports and withdrawal of duty on manmade fibre other than polyester has been continued. Besides, in order to encourage more non-traditional sectors, electric fans, electrical appliances, electricity equipment and cables, transport equipment including motor bikes, sports bags, leather products e.g. leather wallets, auto-parts, stationery, furniture, fresh fruits and vegetables, meat and meat preparations including poultry, juices and syrups have also been included in the package.The export package approved by the ECC is in addition to the three other relief measures announced by the government for the export sector: in the recent budget the government has included packaging material in the zero-rating regime for sales tax in respect of the five export-oriented sectors i.e. textile, leather, sports goods, surgical goods and carpets; the federal government has extended the duration of Rs3 per unit subsidy under Industrial Support Package (ISP) for another three months; and the import duty on 255 out of 484 items of raw material and machinery proposed by the Ministry of Commerce has been reduced during the Budget 2018-19.The extension of the PM’s Export Package for the value-added and non-traditional products and non-traditional markets for a period of three years will provide predictability to local and foreign investors to invest in export-oriented production capacities.These components of the exports package are estimated to provide competitiveness benefits of around Rs65 billion annually (including Rs41 billion in Drawback of Local Taxes and Levies) to the export sector.The export package of Rs65 billion approved for three years and new sectors included for duty drawback include electric fans, transport equipment, auto parts and accessories, machinery including electrical machinery, furniture, stationary, fruits, vegetables, meat and meat preparations, poultry and poultry preparations.The exports to non-traditional markets will continue to receive 2 percent more. Yarn, grey fabric and tanned leather, being raw materials have been excluded from the eligible sectors. The eligible sectors continued for the extended package include textile garments, processed fabric, home textiles, gloves, footballs and other sports goods, leather garments, other leather goods including bags, wallets and belts, footwear, surgical goods and cutlery.Packaging material has now been allowed for zero-rating and GST refunds. The Ministry of Commerce had sought tariff reduction on import of 484 export sector inputs out of which 255 recommendations have been included in the Finance Bill approved by the Parliament.

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