Uploaded: 26/8/2009

Pakistan Launched a Five Year Textile Policy

The Pakistani government on 12 August 2009 announced the first ever five-year Textile Policy 2009-14 which offers about Rs87 billion cash subsidy to the textile and clothing sector to boost exports. It envisages plans to boost textile exports to $25 billion from the current $17.8 billion by 2014.

The textile policy 2009-14 providing incentives of export refinance at lower rates, relief on existing long-term loans, restructuring and reorganisation of the textile sector, drawback of local taxes, refund of past R&D claims etc.  The policy also exempts the textile industry from load shedding and allows it prioritised gas supply.

The government has also subsidised the export refinance with a reduced rate of 5 percent and Rs 2.5 billion allocation. The policy allocates Rs 5 billion relief on the existing long-term loans of the textile industry.

All textile machinery imports will be zero-rated to encourage new investments. Support will be provided for setting up effluent treatment plants for the existing industry.

Duty Drawbacks

An amount of Rs44 billion as special drawback rates will be provided to value-added textile exports for two years. For this purpose following drawback scheme is proposed:

·        Processed fabric 1% of the FOB value of exports

·        Home textiles 2% of the FOB value of exports

·        Garments 3% of the FOB value of exports

·        In addition, those who achieve an increase of 15% in exports relative to last year will be given 1% additional draw-back.

Export House Scheme:

To initiate a process of building big export houses, Government is planning to treat local sales of yarn and fabrics to large exporter as deemed exports. For this purpose, small producers will get 1% drawback on levies and unadjusted taxes on sales to the export houses.

Capital Intensive Projects

Under UTF for capital intensive projects, the government will bear 50% of interest cost of new investment in plant and machinery with a maximum of 5%. For small investments, government will contribute up to 20% of capital cost as a grant.

Back to Index of August 2009