ISLAMABAD: The government will unveil an excellent textile and apparel policy with cash subsidy and low rates worth Rs 960 billion to promote the export and production of value-added textile products.
According to the details, the proposed policy would be the third such policy, estimating three scenarios that would increase textile and clothing exports to a minimum of $15.7 billion and a maximum of $20.8 billion by the end of 2025.
Sources said that the Federal Board of Revenue (FBR) has asked for a week to analyze the implications of the proposed measures under the policy, a major recommendation of the Textile Division is that five exports In order to implement zero rate tax in the sectors, this facility was withdrawn in the year 2019.
The FBR will raise the issue of restoration of the zero-rate tax system with the International Monetary Fund, the source added, adding that stakeholders also want its restoration to deal with the effects of COVID-19.
The FBR claimed that the highest refunds of the industry have been implemented. In the last two years, the government has paid Rs 9.70 billion in pending payments to the previous governments while the previous two governments have paid Rs. Only Rs 68 billion was paid.
The policy is equipped with measures that will help address the issues faced by the textile sector during COVID-19, which has disrupted the supply chain, affecting global commodity trade.
Furthermore, the policy should attract domestic and foreign investment in the development of textile value chain and value-added sector with special focus on small and medium enterprises (SMEs), however, incentives only in existing industries. Businesses are focused on reducing costs and no specific link is suggested to increase exports or expand production lines.
Past policies have only increased subsidized exports instead of expanding the production line. Currently, the textile and garment industries are working to the best of their ability to meet the demands of buyers.
Under this policy, the government has proposed a subsidy of Rs. 200 billion for the next five years to supply electricity to the export sector at discounted rates. Electricity will be provided at 9 cents per kilowatt-hour, as well as industry. An amount of Rs. 150 billion will be allocated for the supply of gas at subsidized rates.
The government will provide RLNG at 6.5 per MMBTU and system gas at 786 per MMBTU over the next five years, to pay the drawback of local tax and levy scheme (DLTL). It is proposed to allocate Rs. 400 billion for this which is a cash subsidy on exports in the country.
Currently, the government provides cash subsidy under DLTL which was started by the previous government.
It has been decided in principle that there will be no change in the existing Export Finance Scheme and Long Term Financing Facilitation Schemes, allocating Rs. 200 billion to ensure the availability of short-term credit and long-term financing facility to exporters.