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Hard work follows unveiling of Textile Policy - PRGMEA

17
Aug '09
The first ever Textile Policy 2009-14 was announced by the Federal Minister of Textile Industry Rana Farooq Saeed Khan on Wednesday. The policy sets an ambitious target of achieving $ 25 billion over the next 5 years as compared to exports of $ 9.6 billion achieved during last fiscal year.

The policy is really a broad based document which encompasses areas like technology up gradation, infrastructure development, skill development, etc. and addresses rationalization of fiscal measures for the ailing textile industry along with removal of regulatory bottlenecks.

The government has for the first time, addressed all sub sectors of this industry separately with special emphasis on the value added sectors.

The policy provides many measures to address the falling trend of textile exports, but the most notable are as under:

·Tiered drawback scheme with maximum benefit to the value added sub sectors.
·Full refund of past R&D Claims
·The availability of export refinance at 5%.
·Priority in gas and electricity load management.
·Relief on existing long term loans.
·Zero rating of exports.
·Tax free import of machinery.

Although the textile policy is a very comprehensive one and covers almost all the relevant areas of the textile industry like skills development, market support, zero rating of exports, incentives for employment of women and disabled persons, etc. but the government will have to devise a proper SOP framework in order to implement and monitor policies which are contained in the policy.

It is really advisable that the government should consider a fast and transparent procedure for the disbursement of funds allocated for various programs. By breaking the overall target of $ 25 billion into intermediate yearly targets will also help the industry in monitoring its own progress. Only timely government decisions will make this policy meaningful and any delay in framework formulation will make this policy ineffective.

Most notable areas contained in this policy are being outlined as under along with critical analysis on each:

Technology Up-gradation Fund (TUF):
Under this scheme, for capital intensive projects, government will pick-up 50% of interest cost of new investment in plant and machinery with a maximum of 5%. For small investments, government will contribute up to 20% of capital cost as a grant.

Although it is not entirely clear but from the wordings it seems that government will share half of maximum 5% in total interest cost of large capital intensive projects. Government has also decided to pickup 20% of capital cost for small units. The encouragement of new investment will now depend upon the formulation of procedures where fast disbursements of these grants are ensured.

Infrastructure Development:
Government is putting its emphasis on development of clusters for small enterprises and an amount of Rs 1 billion is being allocated this year for infrastructure development.


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