Rs 50 billion would be needed for reviving the exports of textiles, whose potential is estimated around $24 billion. This is the finding of the report submitted by Zubair Motiwala in May on the directives of the Prime Minister.
Textile Ministry sources said that another report was being prepared by Tariq Saeed Saigol of Nishat Group on PM's directive, which may help the government to take firm steps to handle the textile exports crisis, declining owing to tough competition with China, India, and Bangladesh.
In view of growing external trade crisis in the textile sector, which had dropped by 10.33 percent by the end of October, similar task has now been given to Tariq Saeed Saigol to identify the problems, to help address the issue in the light of both reports.
Motiwala report said that decline in the textile sector was causing overall trade deficit, which is likely to rise to $8 billion at the end of current fiscal year.
According to the report, the only solution lay in enhancing production and export capacity. The value-added textile industry has the potential to deliver the goods by raising finance to combat the trade deficit.
Giving break-up of additional cost of Rs 50 billion to end the crisis, he said that Rs 10 billion would be required for subsidising gas for textile industry; Rs 7.3 billion for reducing gas tariff costing the government on account of self-generated power plants; Rs 8 billion for loss on charging KIBOR rate to 50 percent to the industry; Rs 6.35 billion on reimbursement of 5 percent points by reducing KIBOR on outstanding long-term loans (including new and BMR) subject to a maximum residual interest/markup of 5 percent and Rs 1 billion would be required on ten percent financial support for capital investment in textile industry including second-hand machinery, it added.
Moreover, Rs 0.6 billion would be spent on the purchase of machinery and generators and withholding tax on exports of textile should be applied at flat rate of 0.25 percent, which would cost another Rs 5.4 billion. Similarly, Export Development Surcharge (EDS) of 0.25 percent when discounted for three years would add to the cost by Rs 1.35 billion. Additional burden of Rs 7.5 billion would have to be borne on account of R&D. The last proposal accounts for 5 percent of FOB value as Market Access Support Program (MASP) of about Rs 3 billion to revitalise the garment exports.
Motiwala said he was confident that implementation of these proposals would have a positive impact on the textile industry and Pakistan would regain its leading position in the region earning a lot of revenue and creating one million new jobs, according to the report.