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Pak govt announces mark-up scheme for textile SMEs

17 May '12
2 min read

According to a notification issued by the Pakistan Ministry of Textile Industry, in order to attract new investments in the textile sector of the country, the Federal Government would pick up 50 percent of the mark up with an upper cap of five percent or Pk Rs. 50 million per annum, whichever is less.

The Government would also provide grant of up to five percent to new projects involving equity investment in machinery and technology, based on their LC document with a maximum cap of Pk Rs. 50 million.

Likewise, projects with loan or equity based investment in machinery and technology with a cap of Pk Rs. 10 million would be allowed grant of up to 20 percent of their capital cost for new plant and machinery.

Based on LC document, such grant would be made available as investment support only to Small and Medium Enterprises (SMEs) qualifying under the State Bank of Pakistan Prudential Regulations for SMEs.

Under the Textile Policy 2009-14, the Government announced a technology up-gradation fund scheme, and later on issued Technology Up-gradation Support Order 2010 in April 2010, under which incentives are provided for textile machinery and technology.

The mark-up support and investment support would only be extended for technology and machinery identified in the "TUF documents", and which satisfy the eligibility norms set by a technical committee led by the Secretary. The committee would be constituted and notified by the Ministry of Textile Industry.

The scheme has been made effective with retrospective effect from September 1, 2009 and would remain valid till June 30, 2014. Payments under the scheme would, however, continue during the tenure of the loans stretching till June 30, 2024.

As per the SBP rules, the repayment period including the grace period should not exceed 10 years.

The machinery procured using the benefit from the 50 percent mark-up scheme with an upper limit of Pk Rs. 50 million may be utilized for producing or processing fibre, yarn, fabric, filament or any other product, entirely or partially produced from fibre with use of machinery to enhance its efficiency, productivity, information communication technology, energy and environmental compliance for machinery/technology identified and defined by the Technical Committee.

Fibre2fashion News Desk - India

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