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October 27, 2020

Textile Policy 2020-25 on the cards: Targets $20.8 bn exports, gives more incentives

Top Story

October 27, 2020

ISLAMABAD: The government has almost finalised the Textile Policy 2020-25 with textile products’ export target of $20.8 billion and eight objectives starting from encouraging value addition, ensuring profitability of cotton growers to strengthen Pakistan’s expertise in manmade fiber, putting small medium enterprises (SMEs) on priority for infrastructure, compliance, energy efficiency, quality assurance and productivity projects.

The Brand Development Fund (BDF) will be launched to help boost export of textile products. Textiles and apparel machinery will be zero rated.

Under the proposed textile policy, electricity tariff will be at 7.5 cent per unit and RLNG tariff at 6.5 cent per MMBTU, while the system gas will be provided to textile sector at Rs786 per MMBTU. However, the current electricity tariff for export industry stands at 9 cent per unit that will be decreased to 7.5 cent per unit for three years (till 2025), once the policy is approved and gets enforced.

Electricity tariff of 7.5 cent per unit and gas price of $6.5 per MMBTU till 2025 will help attract investment in textiles and apparel value-chain, textiles and apparel machinery.

The policy also unfolds that Long-Term Financing Facility (LTFF) and Export Financing Scheme (EFS) rates will not be changed and LTFF will continue at 5 per cent and EFS at 3 per cent. The industrialists wanted the government to further lower rates of loans under the LTFF and EFS, but the government didn’t accept the demand of the textile industry.

The government will enact a Trade Resolution Act and strengthen the Directorate General of Trade Resolution Organisation (DGTRO) to address trade disputes between suppliers and buyers. Moreover, an online portal will be established to register trade complaints. Textile associations will also be involved to settle trade disputes.

The Ministry of Commerce will extend support to textile associations to devise a media strategy for image building and branding of Pakistan's textile and apparel industry.

More importantly, international companies will be invited for investment to bridge demand-and-supply gap in manmade fiber (MMF) production. The manmade fiber based value-chain has confined itself to domestic market only. Tariff and customs duty drawback rates of this value-chain will be rationalised. The manmade fiber, not manufactured locally, will be made zero-rated and based on cost of doing business exercise, garments and made-ups having manmade fibers/filaments will be provided higher drawback rates.

For other natural fibers, a special board will be constituted for development of wool, jute, hemp, and other natural fiber-based textiles and apparel value-chain. Till the development of these sectors, raw and semi-processed raw materials will be placed in zero import tariffs.