Ministries of Commerce and Textile Industry have reportedly locked horns over the ownership and utilisation of billions of rupees in the Export Development Fund (EDF) which is presently under the control of Finance Ministry, well informed sources told Business Recorder.
The federal government collects 0.25 percent as EDF on almost 85 percent exports and deposits it in the accounts of Finance Ministry - a fund utilised for the development of export-oriented sectors. Contribution of textile sector in EDF is 55 percent. Annual collection of EDF hovers around Rs 5 billion per annum but the Finance Ministry has released about Rs 1 billion per annum to the Commerce Ministry for different projects. Commerce Ministry has misused the amount of EDF on subsidy to different sectors through Trade Development Authority of Pakistan (TDAP) with some of its senior officials in jail and some still occupying attractive positions in TDAP.
Commerce Ministry habitually utilises EDF for projects approved by the EDF Board headed by the Minister for Commerce. However, instances are available where EDF was misused on leisure trips of Commerce Ministers and even on blue eyed Commercial Counsellors.
Ministry of Textile Industry which is striving to get approval of Textile Policy 2014-19 maintains that the textile value chain is highly export-oriented and is a major contributor to the export development surcharge. Ministry of Textile Industry also claims that it has the responsibility for bringing improvement in the complete value chain through intervention for skill enhancement, productivity improvement, technology upgradation and creation of an enabling environment which, in turn, helps exports to increase.
Ministry of Textile Industry has proposed the EDS should be divided into textiles and non-textiles to read as "The Export Development Surcharge levied at the rate of 0.25 percent shall be proportionally divided into Textile Development Fund (TDF) for the use of the Ministry of Textile Industry and EDF (non-textiles) for the Ministry of Commerce". The Ministry of Textile Industry will constitute a nine-member Textile Development Board to administer the TDF.
It has also been proposed that Finance Division open a non-lapsable account in the State Bank of Pakistan titled "Textile Development Fund" and disburse funds on approval of the Textile Development Board. The utilisation of funds would be subject to audit by the Auditor General of Pakistan every year.
Ministry of Textile Industry has promised that the fund will be utilised for all activities related to development of textile sector and implementation of initiatives proposed in the Textile Policy. The fund would not be used by the Board for fiscal incentives/subsidies unless approved by the ECC of the Cabinet. The Board, after endorsement from the Finance Division would submit annual reports on the conduct of its affairs to the ECC at the end of each financial year.
According to sources, Commerce Ministry is furious at the Ministry of Textile Industry for seeking its "due share in EDF because the former feels that it will be deprived of its hegemonic role". "Ministry of Textile Industry's main focus is access to funds and not other textile-related issues like power generation," the sources added.
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