Pakistan's textile industry, so far bogged down by issues like labour shortage, power and gas prices hike and so on is in a jubilant mood with the government announcing a textile package. The package announced in Budget for 2014-15 includes both short-term and long-term concessional loans, duty-free import of machinery and incentives on technology upgrade, which the segment has long been appealing for.
Most of the incentives announced are related to the value-added textile sector. This depicts the government’s keen interest in increasing the country’s exports of finished textile products, with EU granting GSP+ status to the country. The segment contributes over 50 per cent to Pakistan’s exports. Finance Minister Ishaq Dar also announced that textile industry units in the value-added sector would be provided Long Term Financing Facility (LTFF) for technology innovation from the State Bank of Pakistan (SBP) at the rate of 9 per cent for 3-10 years duration and the mark-up rate for Export Refinance Scheme of SBP has been reduced from 9.4 per cent to 7.5 per cent from July 1, 2014.
The industry has hailed the much needed textile package and expects it to bring positive change to the landscape of the finish goods industry. The textile sector was already enjoying duty-free import of machinery under textile policy 2009-14 but its duration was about to end on June 30, 2014. For the segment to take full advantage of GSP Plus facility in the European Union (EU), the concession has been extended for another two years.
Dar also announced that in future, all admissible refund claims of exporters will be disposed off within three months, if not earlier. In recent months, sales tax refund is one of the biggest concerns of textile exporters that has adversely effected cash flows.
