The government intends to divert the six percent R&D subsidy towards the real 'research and development' of the textile sector instead of giving it to the exporters, sources told Business Recorder here on Tuesday.
It is providing this subsidy to enhance the contribution of this industry to the GDP, as the textile industry is contributing about 76 percent to the export earnings. According to the sources, despite six percent subsidy to the textile sector, Pakistan's textile exports are even behind its regional competitor Bangladesh.
"The exporters are earning huge profits without improving the standard for competing in the global market. Therefore, the government has decided to shift the R&D subsidy to the actual research and development activities to improve quality of the textile export", the sources said.
The readymade garment exports stood at $106.590 million during January 2007 and at $132.260 million during December 2006, depicting a decrease of 19.41 percent or $25.670 million. There is also a sharp deceleration in the export of textile manufactures during FY07 as it was recorded 4.9 percent compared to 16.2 of percent last year.
Cotton fabrics exports declined by 4.3 percent during the FY07 as compared to fairly healthy growth of 13.2 percent in FY06. There is major reduction in the cotton fabrics exports to us which declined by 35.5 percent during the FY07.
Cotton yarn showed a poor export performance by depicting a nominal growth of 3.1 percent during FY07 as compared to the robust growth of 30.9 percent in FY 06. The bed-wear exports recorded a negative growth of 3.9 percent during FY07 as compared to 40.6 percent last year.
The government intends to put an end to the R&D subsidy but the textile sector, that is already experiencing low exports for lack of quality products as compared to other competitors, will have to bear more loses as ever before. The overall view of the textile exports has already made it clear that the exporters are making money instead of improving quality of the products.
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