Advisor to the federal government for Ministry of Textile and Industries Dr Mirza Ikhtiar Baig on Saturday said that 67 percent of the Rs 40 billion Export Investment Support Fund is targeted to be spent on textile and clothing industry.
In the federal budget 2009-10, the government proposed the setting up of Rs 40 billion ($500m) Export Investment Support Fund for which the government would contribute Rs 10 billion, another Rs 10 billion would be contributed by the Export Development Fund and the rest Rs 20 billion would be contributed by the government agencies through mopping up surpluses in commercial banks.
Talking to Business Recorder here, Ikhtiar Baig revealed that 67 percent of the Export Investment Support Fund would be spent on textile and clothing industry, aimed at value addition and consolidation of the sector. He said that in the budget 2009-10, Federal Excise Duty (FED) on the import and supply of viscose staple fiber is withdrawn and tax on exports of textile and clothing items made zero rated in the real sense.
Ikhtiar Baig revealed that there is also a summary to withdraw 12.5 percent cross subsidy on gas which will benefit mainly spinning sector. In addition there are schemes such as opening of warehouses and marketing offices abroad. He further said the government also plans to give enhanced duty drawback to value added textile exporters in lieu of R&D support.
Baig said in addition, Rs 500 million ($6.2m) has been earmarked for the 3 percent interest rate subsidy to the textile industry while Rs 510 million ($6.4m) will be used to establish the necessary infrastructure to support export oriented textile and clothing firms.
Textile industry will be given priority in the allocation of gas and electricity, as the industry is now first priority. The government also plans to establish large export houses, and launch a National Trade Corridors Improvement Programme, he added.
Ikhtiar said there are also allocations for Textile and Garments City Projects. The Prime Minister of Pakistan recently launched Infrastructure Development of Pakistan Textile City Project in Karachi and soon Faisalabad Garments City Project will be launched, he added.
He said Rs 246 million ($3.1m) has been earmarked for Textile City Karachi, Rs 207 million ($2.6m) for Faisalabad Garment City Project, Rs 25 million ($0.3m) for the Lahore Garment City Project, Rs 17 million ($0.2m) for upgrading Textile Institutes and Rs 15 million ($0.2m) for the Export Development Plan.
There was also a proposal for the disbursement of 3 percent to 4 percent mark-up on investment against plant and machinery in textile sector similar to Indian Technology Up Gradation Fund (TUGF) scheme in the new textile policy to be announced soon, he added.