Pakistan's New Textile Policy Promotes Exports

Pakistan’s ministry of textile industry has announced the long-awaited Textile Policy 2014-19, which sets annual exports target of US$ 26 billion by 2019.

“The annual exports target of $26 billion by 2019 is ambitious but not beyond our potential,” minister for textile industry Abbas Khan Afridi said while addressing a press conference.

Budgetary support, drawback of local taxes and levies, easy finance, sales tax regime, duty free import of machinery, policy interventions, tariff rationalisation, fibre diversification, product diversification, SME development, enactment of domestic labour laws, revival of sick units, marketing strategies, technology upgradation, establishment of world textile centre and model cotton trading houses, revitalisation of projects like Pakistan Textile City, garment cities and capacity building of the ministry and related organisations are the salient features of the textile policy.

Besides doubling textile exports from $13 billion to $26 billion, the textile policy 2014-19 aims to double value addition from $1 billion per million bales to $2 billion per million bales by 2019, facilitate investment of additional $5 billion in machinery and technology, improve fibre mix in favour of non-cotton i.e from 14 per cent to 30 per cent, improve product mix especially in garment sector from 28 per cent to 45 per cent,  promote use of information and communication technologies, and development and strengthening of clusters, Amir Marwat, secretary textile industry, said.

In the textile policy, the ministry proposed that schemes approved in finance bill 2014-15 may continue during the next five years. These schemes include drawback of local taxes and levies (DLTL), reduction in markup rate from 9.4 per cent to 7.5 per cent under export refinance scheme, long-term financing facility for technology upgradation at the rate of 9 per cent, duty free import of machinery, and vocational training.

For the five-year period 2014-19, an amount of Pk Rs 64.15 billion will be spent towards the textile sector, with the finance division providing Rs 40.6 billion and the remaining Rs 23.5 billion to be financed through Planning Commission and Textile Development Fund. The amount of Rs 40.6 billion has been reserved for incremental DLTL, Technology Upgradation Fund, Brand Development Fund and drawback on deemed import basis.

The remaining Rs 23.40 billion will be allocated for skill development of handloom workers, textile exhibition, hand knotted carpets, hand knotted carpet training, SME, trainings, product development and innovation fund, skill development programme, textile universities, world textile centre, weaving city, mega and minor cluster development and better cotton initiative.

On energy issue, a joint committee of ministries of textile industry, petroleum and natural gas, water and power will take measures to give priority to textile sector for availability of energy to fully utilise GSP plus status.

Pakistan has complete textile production chain and the sector provides employment to about 40 per cent of industrial labour force, consumes more than 40 per cent banking credit and accounts for more than 8 per cent of the country’s GDP.