Pakistan offers $1.7 bln in incentives to revive its textile industry

Prime Minister Nawaz Sharif announced a package of incentives worth 180 billion rupees ($1.72 billion) after a meeting with top exporters on Tuesday aimed at reviving the struggling textile industry. However, it would take some time like four to six months before the favourable impact started reflecting in the country’s exports.

Textiles make up more than half of Pakistan’s exports, but it has lost ground to South Asian neighbours in recent years, hurt by chronic energy shortages and underinvestment in machinery.

Textile exporters have described the government’s incentive package for export-oriented industries as very positive that will cushion the declining exports of the country.

The ball is now in textile exporters court, the government has done the required, said Ziad Bashir, Executive Director of Gul Ahmed Textile Mills, one of the country’s largest composite textile mills.

Finance Minister Ishaq Dar said that the customs duty and sales tax on import of cotton had been abolished, with a sales tax on imports of textile machinery scrapped.

Falling exports have become a major concern for the government at a time when remittances from abroad are also falling, potentially putting pressure on the currency.

The cost of doing business including gas and power tariffs, gas infrastructure development cess (GIDC), sales tax and high value of the rupee against the dollar has put pressure on export sectors in general and textile in particular.

The measures announced in the package would bring the cost of production down and eventually increase the competitive edge of exporters in the international market.

Improved security across Pakistan is also more likely to attract foreign customers and investors to the textiles industry, officials said.

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