The federal government has finally abolished the research and development (R&D) support programme for textile sector, as no budgetary allocation has been made in this connection. Sources told Business Recorder on Friday that some Rs 19 billion were allocated to provide R&D support to textile sector aimed at boosting exports during FY08, which has, however, been discontinued.
R&D programme was initiated for underpinning the dwindling textile exports hit seriously in the wake of abolishment of quota regime in European Union in 2005. The then textile minister Mushtaq Cheema announced 3 percent to 6 percent R&D support for different textile sectors.
In the first phase, R&D support was announced only for fabrics in May 2005. However later in August 2006 some other textile products were also included in the programme. Presently, the government is paying 3 percent R&D support on fabrics, 5 percent on bed wear and knitwear and 6 percent on textile garments. The government has paid some 31 billion rupees to continue R&D support since the announcement of the programme and every year the government has been allocating a huge amount in this connection.
The State Bank of Pakistan has paid some Rs 6.975 billion to fabrics, Rs 0.997 billion to bed wear and knitwear, while some 21.175 billion to garments sector under the R&D programme as subsidy. As per government notifications, the R&D support programme is expiring on June 30, 2008. It has been decided to discontinue the programme and if a notification for its continuation was not issued then it will automatically abolish, the sources observed.
A leading textile tycoon has also contacted some senior government officials for continuation of R&D and was informed that this step has been taken following the rupee depreciation. The officials told the textile tycoon that the dollar has reached Rs 68-69 as compared to Rs 61-62 few months ago and exporters will be the main beneficiaries of the rupee depreciation.