Pakistan value added textile sector urge to clear TUF soon

The Pakistan Ministry of textile industry had allocated Rs42.5 billion worth of mark-up support and other incentives in April 2010 to improve the sector’s technological configuration, remove critical imbalances in the value-chain and help it achieve compliance with international standards.
But for the past two year, billions of rupees in refund claims under technology up-gradation fund (TUF) has been stuck which the value-added textile sector urged the government to clear it soon.

Jawed Bilwani, coordinator of Pakistan Hosiery Manufacturers and Exporters Association (PHMA) in a letter to the Prime Minister Shahid Khaqan Abbasi said that upon TUF’s scheme announcement, exporters had made further investments to upgrade their industrial units. TUF was announced under the textile policy 2009-2014, while the industry was asked to submit refund claims till 31 August, 2015.

Nevertheless, the government has not honoured its promises since no amount under the said scheme has been paid till date, which discouraged exporters and industrialists to make future investments.”

The exporters had timely submitted their claims with the State Bank of Pakistan (SBP) for mark-up and investment supports. The industry’s reluctance to modernize production lines has long been biting the country’s exports. Textile industry accounts for 60 percent of the country’s total annual exports of $20 billion. Knitwear, bedwear and readymade garments are the key exports revenue spinners.

PHMA, the country’s premier trade body representing hosiery and knitwear industry, also bore the logistics expenses of textile ministry’s teams, which paid visits to physically inspect the upgrades required to qualify for incentives.

Exporters have not received claims amounts as the SBP is awaiting the TUF scheme’s fund release under textile policy 2009-2014, Bilwani said. They request the (issuance) of necessary instruction to ministry of finance to release funds to SBP for disbursement to exporters on immediate basis.

The association’s official further said that the government announced second TUF scheme under textile policy 2014/2019. It will support the exporters who are facing liquidity crunch amid stuck refunds and streamline cash flow, which will lead to increase in exports, reduction in trade deficit and generation of new employment opportunities

But it still lacks the procedure to apply for the scheme. Hence the exporters who invested in upgrading plant and machinery between 1 July, 2014 and 30 June, 2016 will be deprived from (benefits of the latest) TUF scheme.

Bilwani, who is also chairman of Pakistan Apparel Forum questioning the usefulness of the new scheme until the previous claims are settled urged the government to direct the textile ministry to revise up the application period of the current TUF scheme to five years from three years.