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Much needed ‘Textile Policy 2020-2025’ finally to be approved by PTI govt.

The Pakistan Tehreek-i-Insaaf government has rolled out a new "Textile Policy 2020-25" that seeks to revive much important Textile industry.

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The federal government has finalized its ‘Textile Policy 2020-25.’ The Textile industry is one of the most important export industries that Pakistan has.

The new policy contains subsidies and lower tax rates for an ailing industry. The textile industry in Pakistan is one of great significance for its contribution to employment and exports. The production of cotton textiles predominates, despite a large jute industry, increasingly important carpet industry, and synthetic textiles.

Although the share of textiles in manufacturing value-added fell from 32.4 percent in 1977 to around 15 percent in recent years, the industry still employs 28 percent of the total labor force. It accounts for around 60 percent of the country’s total exports (United Nations 1990, p. 53). Capital investment in the sector accounts for around 28 percent of total national investment (and 37 percent of foreign currency investment in 1991).

The draft policy has already been submitted to the prime minister secretariat. It will be submitted to the cabinet for approval; Dawn has learned from knowledgeable sources on Tuesday. The last textile policy was announced in 2014 by the-then textile minister Abbas Khan Afridi.

The proposed package carries special duty-drawback rates, rationalization of duty on the textile value chain, and subsidy on long-term loans and development subsidies.

Razak Dawood, Adviser to PM on Commerce and Textile, in his tweet, said that the prime minister has, in principle, approved the Textile Policy 2020-2,5. Under the rules of business, it will be processed to the federal cabinet for approval. The draft of the Textile Policy 2020-25 available with The News also reveals that electricity and gas tariff will be fixed for the next five years till 2025 at US Cent 7.5 per KWh and $6.5 per MMBTU, respectively. It also indicates that the withdrawal of Zero Rating or SRO 1125 will be reviewed.

Pakistan is one of the few countries having a complete textile value chain from farm to fashion, and the textile sector is the biggest employment generator — especially garments.

It mentions that the global market for textile exports is dominated by China, having a 32pc share of textile trade that is $302 billion. Pakistan’s share is 1.6pc in the global textile trade, targeted for 3pc over the next five years.

Mentioning the initiatives to enhance production and yield of cotton to make availability from nine million bales to 20 million bales within five years, the textile policy says that cottonseed quality will be improved, and the latest farming and picking practices will also be introduced. The government will emphasize the production of long-staple cotton, resulting in minimal reliance on imported cotton to enhance overall exports.

Read more: Strengthening Cooperation in Trade, Industry: Leveraging CPEC to Double Textile Exports

It also touches on the important issue of Man-Made Fiber (MMF) availability at competitive prices as the world trade is rapidly shifting from cotton to human-made fibers. Globally, the use of human-made and synthetic fibers against natural fibers has shifted to a ratio of 70:30, with synthetic fibers having the main share. At present, Pakistan’s consumption ratio of MMF to cotton is 30:70. There is currently 7pc customs duty on importing polyester staple fiber with total import expenses ranging up to 20pc, including anti-dumping duty. Pakistan will shift focus from cotton to Man-Made Fibres (MMF) and target fiber mix of 50:50

Pakistan has not achieved its full export potential and product diversification due to limited access to raw-material. To this effect, the application procedures for temporary import schemes will be simplified. Inter/intra-Bond/Scheme transfers of intermediate products to direct or indirect exporters and commercial importers will be allowed. And by extending TIS to indirect exporters, Pakistan will be able to achieve price competitiveness and product diversification, and effective implementation of this reform will be a game-changer.

GVS News Desk