The Pakistan textile industry finally gets its new Textile Policy 2014-19 as the Economic Coordination Committee of the Cabinet (ECC) gives approval. Announcing the new textile, the Textile Minister, Abbas Khan on Monday said that an amount of Rs 64.15 billion was proposed for next five years against the allocation of Rs 188 billion for the last textile policy 2009-14. This is help boost countryâ€™s exports of textile and clothing sector to $26 billion by 2019 from $13 billion.
Of the total amount Rs64.15 billion proposed, the finance division will provide Rs 40.6 billion for duty drawback, technology up-gradation, brand development and drawback on deemed imports, etc whereas the remaining Rs 23.5 billion will be financed through Planning Commission and Textile Development Fund for skill development, dedicated textile exhibitions, establishment of world textile centre, weaving city, incubators, apparel house and mega textile awards.
He said that only Rs 25 billion out of its total allocation of Rs 188 billion were released during the last five years but now the government was committed to utilize the full allocation.
The government would shift focus from exporting raw material to value added products as this approach would not only boost the economy but also help create millions of new employment opportunities. The government would also provide training to 120,000 people who will get a handsome stipend during their training period.
He said that the volume of exports would be enhanced by $2 billion every year which would help create 5 million more employment opportunities in the textile sector.
Abbas Afridi said that the Ministry of Textile Industry would encourage setting up Pak Cotton brand, fashion labels and brands abroad to increase exports as brand Development requires long term financial commitment, the ministry would develop a scheme similar to LTFF with State Bank of Pakistan in which loans may be made available at same policy rates available in LTFF scheme.
Textile policy 2014-2019 envisages Pakistan as a leading value- added textile exporting country. Textile industry is an important manufacturing sector and has completed production chain with inherent potential for value addition at all stages of processing.
Secretary textile industry Amir Marwat apprised on the occasion that textile policy 2014-2019 aims at doubling value addition from $ 1 billion per million bales to $2 billion per million bales in next five years, double textile exports from $13 billion to $ 26 billion, facilitate investment of additional $5 billion in machinery and technology, improve fibre mix in favour of non-cotton i.e from 14% to 30%, improve product mix especially in garment sector from 28% to 45%, promote use of ICT , development and strengthening of clusters. The minister said that the ministry proposed that schemes approved in finance bill 2014-15 may continue during the next five years. These include drawback of local taxes and levies, reduction in markup rate from 9.4% to 7.5% under export refinance scheme, long term financing facility for technology upgradation at the rate of 9%, duty free import of machinery and vocational training.
The ECC also approved establishment of a joint committee, comprising water, petroleum and textile industry secretaries in order to resolve the energy issue of the textile sector. This committee was tasked to ensure availability of energy to fully utilize GSP plus status.
Two high-level committees were constituted by the ECC to look into the issue of export development surcharge and drawback on deemed import basis for polyester value chain. The committee, headed by the planning minister, will propose amendments to Export Development Fund Act.
The other committee, headed by Finance Secretary Dr Waqar Masood with Textile Industry Secretary Amir Marwat and FBR Chairman Tariq Bajwa, will devise a proper mechanism for drawback on deemed import basis for polyester value chain. The committee is advised to report back in a month.
The support will continue for the rest of policy period. However, eligibility criteria for the above support will be properly aligned with all policy goals from budget period 2015-16 onwards.
The mark-up rate for Export Refinance Scheme (EFS) of State Bank of Pakistan is being reduced from 9.4pc to 7.5pc from July 1, 2014.
Textiles industry units in the value-added sector would be provided Long-Term Financing Facility (LTFF) for up-gradation of technology from State Bank of Pakistan at the rate of 9pc for three to 10 years duration. In case of fall in the policy rates, EFS and LTFF rates would be revised accordingly.
The textile minister said that an expeditious refund system is being introduced and a fast track channel for manufacturers-cum-exporters is being created, whereby the FBR would dispose of all their pending sales tax refund claims within three months, if not earlier.
He said that for the next three years, 50 small companies from the sector will be picked each year for government support. The new textile policy is formulated to help enhance overall exports in textile and clothing sector of Pakistan
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