Textile industry’s revival: Bailout package worth Rs175 billion prepared

PM will soon take a decision on offering tax and duty concessions

ISLAMABAD: Prime Minister Nawaz Sharif will soon take a decision on a huge bailout package of over Rs175 billion for the textile industry aimed at supporting the exporters of textile products.

A source in the Ministry of Textile Industry told The Express Tribune that a comprehensive bailout package had been finalised and sent to the prime minister for final approval for support of the textile sector, which accounts for more than 60% of the country’s total exports.



The textile package was prepared keeping in view the country’s overall falling exports, which dropped to $20 billion from $24 billion within two years with a major decline in shipments of textile products.

The source said after discussion with the Federal Board of Revenue (FBR), the finance ministry and other ministries, the package was finally submitted to the Prime Minister Secretariat, which is the final authority to take a decision.

Most of the package was related to concessions in taxes, duties and tariffs in addition to offering duty drawback to the exporters, said the official, adding Finance Minister Ishaq Dar and the FBR were opposing the bailout.

They argued that such concessions to the largest sector of the economy would have a huge impact on revenue collection, which would hamper efforts to meet the tax target.

Textile exporters argued that the concessions would not have any significant implications for the revenue receipts and would bridge the shortfall once overall exports started rising.

At present, the higher cost of production and lack of modernisation are the key factors behind the reduced demand for Pakistan’s textiles in foreign markets. India, Bangladesh and some other countries are rapidly filling the gap due to their low cost of production.

Commerce Minister Khurram Dastgir was the leading advocate of the bailout package to arrest a further decline in exports.



At a recent meeting of the Senate Standing Committee on Textile, the commerce minister revealed that the government was considering a bailout package for revival and modernisation of the textile industry.

The package would help modernise technology for value addition in textile products in addition to massive infrastructural modernisation of the industry.

Besides, the government will give special tax incentives to enhance value addition. The proposed technological revival will help the industry compete with the regional competitors.

A six-member committee consisting of officials from relevant ministries and stakeholders, which was constituted to review the challenges faced by the textile industry, has finalised the package.

Published in The Express Tribune, October 25^th, 2016.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.