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Govt announces textile rescue package with more in offing

10
Nov '08

The textile industry will be heaving a sigh of relief on hearing the announcement of the long and much awaited textile package from the government to rescue an ailing industry with incentives and other subsidies.

The Prime Minister of Pakistan chaired a cabinet meeting and approved a slew of measures which includes R & D support to the textile and clothing industry and a relief in interest rates for loans extended to the spinning sector.

According to the proposal, a subsidy amounting to 3 percent for a period of one year will be provided to the spinning mills, which had taken loans at floating rates for importing spinning machinery. This relief is applicable to outstanding balances on principal amounts for loans taken by the units between July 2003 and July 2007.

This caveat though contains a catch. These loans should not have been availed from the State Bank's Long Term Financing for Export Oriented Project (LTF-EOP) scheme. As per the terms of the scheme claims were to be filed for the second half of 2007 in January to claim subsidy, but a number of claims were not filed due to different reasons.

The second tranche of subsidy claims for the first six months of 2008 needed to be filed before June 30, 2008 as per a State Bank circular though actually they needed to be filed from July 2008 onwards.

To bring an end to this impasse, the federal government has advised the State Bank to overlook the delay of filing claims of the last six months of the previous year as well as extend the dates for filing claims for the period January- June 2008 and reimburse claims of 3 percent interest to all eligible beneficiaries under the package.

The total expenditure on the package is estimated to be Rs 1.2 billion. This amount has been confirmed by the advisor on textiles to the Prime Minster; Mr. Mirza Ikthtiar Baig while speaking to leading exporters who assured that the government is seized on the problems faced by the industry and would announce some more measures.

Other measures taken by the government in the meeting include release of water from the Mangla dam which will result in an enhancement of power generation. Also decided at the meeting was a decision to release Rs 60 billion of outstanding bills to the Independent Power Producers (IPP) to enable them to restart their units and help reduce impact of load shedding.

Fibre2fashion News Desk - India

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