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A committee has been constituted to fine-tune textile and apparel policy

ISLAMABAD: The Ministry of Commerce has constituted an eight-member Inter-Ministerial Committee (IMC) under the convenorship of Advisor to Prime Minister on Commerce and Investment Abdul Razak Dawood to deliberate on the Textile and Apparel Policy 2020-25.

The IMC, which includes Minister of Energy Hammad Azhar, Minister of Industries and Production Khusro Bakhtiar, Secretaries of Finance, Commerce, Power, and Petroleum, and Chairman FBR, will submit viable recommendations to the Economic Coordination Committee (ECC) for consideration within two weeks.

The IMC was formed by the ECC during its meeting on October 11, 2021, although its announcement was given on October 15, 2021. The IMC’s inaugural meeting is set for October 20, 2021, at the Ministry of Commerce.

Well informed sources that Some of the incentives proposed in the long-delayed programme were opposed by the Ministers of Energy and Industries and Production, and its consideration has been repeatedly postponed under various pretexts. Deliberations with stakeholders were conducted in accordance with Cabinet ECC decisions, and amendments were duly implemented by the Ministry of Commerce in its updated draught policy.

Also read: During July 21, the massive manufacturing industry in Pakistan shows growth.

PRGMEA calls for final approval of new textile policy

Manufacturing industry in Pakistan has been complaining about competitiveness vis-à-vis competing countries. Recently, the government extended considerable facilitation to textile and apparel sector; however, it has not brought much investment which suggests that long-term profitability needs to be restored to attract investment especially by SMEs.

According to the draft policy, electricity will be provided at US cents 9/kWh all-inclusive and RLNG at S6.5/MMBTU all-inclusive for the FY 202l-22 and concessionary regime will continue at regional competitive energy rates for five years after deliberation with stakeholders. Ministry of Commerce will continue DLTL/ DDT scheme for technical textiles, apparel and made-ups only; however, it will be de-linked with increment in exports. Further, diversification within products and markets will be offered as additional duty drawback.

Also read: In September, Pakistan earned its highest-ever textile exports of USD 1.50 billion

Further, to attract investment, textiles and apparel machinery which has been customs duty free since the first textile policy period will be continued. Additionally, Ministry of Commerce will conduct an exercise with Ministry of Industries and Production on spare-parts which are not manufactured locally and their customs duty will be rendered zero.

Commerce Ministry is also of the view that tariffs have been kept high to encourage investment in upstream value-chain. Nevertheless, high tariffs encourage domestic sales and inefficiencies are induced in pricing.

To encourage exports of value-added products and product diversification, Ministry of Commerce will take following measures on priority: (i) tariff structure of entire textiles and apparel chain including man-made fibre (MMF) and cotton-based value-chains will be rationalized on priority followed by accessories and dyes and chemical; (ii) Customs duty drawback rates of textiles and apparel products will be reviewed taking into account additional customs and regulatory duties; and (iii) temporary importation schemes will be simplified in perspective of SMEs.

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