The textile industry in Pakistan is facing a serious liquidity crunch. The main problem is: sales tax refunds amounting to billions of rupees are yet to be formatted. Pakistan’s textile exports remained flat during the first five months of the current fiscal year as the value-added sector couldn’t perform up to the mark despite the constant currency devaluation against the dollar.

Export sector is the backbone of Pakistan’s economy and earns a major amount of foreign exchange and revenue. Besides, the sector is also labor-intensive and the largest employment provider and generator. Value-added textile exporters say they are battling for survival in the global market due to costly inputs and high cost of manufacturing. The currency has lost a quarter of its value against the dollar since December last year. Banks are reluctant to revise financing limits of companies as per the increased cotton rates.

Textile exporters want immediate payment against tax drawback and levies. They say current and deferred sales tax refunds are lying pending at various large taxpayer units and regional tax offices mainly due to the cross-matching of invoices. In addition exporters want an enabling business environment and a level-playing field.