The textile industry is asking the government to announce a concession and incentive package of Rs50 billion (US$830 million) so that it can compete with India, China and Bangladesh in export market. For pleading this case, a leading exporter Mushtaq Cheema is locking horns on June 29 with the seasoned bureaucrats of the finance and commerce ministries and officials of the State Bank of Pakistan at a meeting to be chaired by Prime Minister Shaukat Aziz.
Prepared and designed by a 15-member committee of the textile industry leaders in April, the incentive package failed to evoke any sympathy from the finance and commerce ministries as the budget-makers ignored it completely in June. The prime minister, after getting a presentation on the package on May 30, is understood to have advised the textile industry leaders to "revisit and review" their proposals. Prime Minister's adviser on finance Dr Salman Shah snubbed textile industry leaders in a post-budget seminar held in mid-June in Karachi and wondered as to from where resources would come for social sectors if Rs50 billion in the budget are given to the textile sector.
Well placed business sources confided to Dawn that the prime minister has held an informal meeting with about half a dozen top leaders of the textile industry on June 28 so that he is well-equipped with facts and arguments for a formal meeting on June 29, which State Bank Governor Dr Shamshad is also expected to attend to respond to the proposals that seek concessions on interests on bank loans.
The break-up of Rs50 billion concessions and incentives makes an interesting reading. The textile leaders are seeking Rs10 billion concession on gas tariff, Rs7.30 billion on captive power, Rs8 billion on export refinance cost, Rs6.35 billion for reducing Kibor on all long- term loans disbursed on or after January 1, 2003, Rs1 billion on 10 per cent financial support for capital investment in textile industry, including second hand machinery, Rs0.6 billion by reducing customs duty to zero on import of all textile machinery, spares, generators for captive power and its spares, Rs5.40 billion by introducing a flat rate withholding tax of 0.25 per cent on exports of textiles instead of a multiple rate, Rs1.35 billion by discontinuing export development surcharge (EDS) at 0.25 per cent on all textiles, extension of 6 per cent research and development (R&D) facility to all processed fabrics, garments and made-ups, including home textiles, and Rs3 billion for garment exporters to help them in market access support programme at the rate of 5 per cent of the fob value.
