Federal Budget: government drops Textile Ministrys demand for Rs 46 billion allocation-Texglobe

ISLAMABAD (June 08 2010): The fate of the textile industry is in limbo as the government has dropped Textile Ministry's demand to allocate Rs 46 billion for different initiatives that were integral components of the textile policy (2009-14) in budget 2010-11, Business Recorder has learnt reliably.

According to the budget documents, there is no subsidy for textile industry and the government has made no allocation for different schemes under the textile policy including Textile Investment Support fund, drawback of local taxes, refund of past Research and Development (R&D) claims, mark-up rates and magnetisation of PTA.

Informed sources revealed that the Textile Ministry had proposed to the government to allocate Rs 46 billion in the budget for 2010-11 for different initiatives but received no allocation in the budget. The government had announced Rs 42 billion for textile export promotion under the textile policy in the budget 2009-10 of which 67 percent was to be spent on textile and clothing industry with a view towards consolidation and value addition of the sector. Sources revealed that textile policy might not achieve the desired result as the Finance Ministry released only Rs 9.75 billion against a request for Rs 40 billion for 2009-10.

Out of the total allocation, the Textile Ministry earmarked Rs 17 billion for drawback, but due to inadequate release by the Finance Ministry it released only Rs 2.7 billion. The Textile Ministry had issued three notifications for the implementation of the policy, under which textile manufacturers would receive three percent drawback on garments, two percent on home textile and one percent on fabrics. But due to inadequate funds the Ministry is facing problems in implementation, sources added.

Similarly an amount of Rs 5.4 billion was allocated for 60 percent remaining R&D claims, but the Ministry has released only Rs 3 billion. Out of Rs 42 billion, Rs 4.5 billion was allocated for magnetisation of PTA, but only an amount of Rs 1.7 billion has been released. Similarly the Textile Ministry has released Rs 1.25 billion against Rs 5 billion for mark-up rate due to non-availability of resources.

When contacted, Waqar Masood Secretary Textile Industry showed his ignorance about the budgetary allocation. He said that the matter is still not clear and stated that 'we will go to the Finance Ministry for the clarification'. Dr Mirza Ikhtiar Baig Advisor to Prime Minister on Textile said that the government had earmarked a huge amount of Rs 40 billion for textile export promotion to achieve export target of $25 billion in the next five years.

"We are still not clear about the allocation for the fund in the budget for 2010-11 as it is also not mentioned in the finance bill. We are trying to get information about the allocation for the said purpose", Dr Baig said.