Textile Industry in Eighth Five Year Plan

Economic Review, June 1993 | Go to article overview
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Textile Industry in Eighth Five Year Plan

Textile Industry is the most important industrial sub-sector. It is based on abundantly available raw cotton, provides largest employment to industrial labour force and is also the largest foreign exchange earner in the country. It contributes nearly 60 per cent of our total exports in 1990-91. In the textile boom increased 1986-91, Pakistan has emerged as a major supply source of cotton textile in the world market confirming its competitive strength. The range of our textile exports comprises: Cotton yarn, cotton fabrics and made-ups including towels, hosiery, knitwear and Readymade Garments. The product mix improved with decline in yarn and grey cloth and an increased share of finished cloth, hosiery, garments and made-ups.

Like many of the low developed countries who have undergone structural changes, Pakistan has committed itself a more outward oriented industrial development strategy considerable progress has made on the policy, investment and regulations. It started deregulation in 1977-78, trade reforms started in the early eighties at a slow pace with major changes occurring in 1987-91. The incentives under rural industrial policy, the free trade policy and the recent incentives for import duty exemption and tax holiday announced in 1991-92, are land mark while major stress has been laid to the development of value added sectors.

Incentives for Development of Textile Industry

The Government Policy has announced the Rural Development Scheme where the textile industry enjoys fiscal benefit in term of exemption of Custom Duty as well as Income Tax Holiday. Further in the Trade Policy 1991-92, the Government has already granted the following incentives for the promotion of investment in the value added textile sectors.

a) Import of 'Machinery' and 'Spare Parts' has been allowed for the following industries, without import duty import Surcharges, Iqra Charges and Import Licence Fee for both industrial and commercial importers.

i) Textile Weaving (Shuttleless Looms) along with power generator.

ii) Textile Processing Industry.

iii) Made-ups, Garment, Hosiery and Towel Industry.

b) Besides above special incentives for textile processing and weaving industry had been granted to develop this sector. These incentives are as under:-

i) Due to high investment cost of shuttleless looms and textile processing units, additional funds for investment support will be provided to these sectors.

ii) Import of major dyes and chemicals used by the processing industry has been made duty free.

iii) Investment in these industries will not be questioned.

iv) Priority will be given for supply of water to processing and finishing industries.

v) Income Tax exemption on manufacture of garments made from local fabrics, expiring on 30th June 1991, had been extended up to 30-06-1994.

Since Textile Industry has been deregulated and no Government permission is needed for setting up a textile unit. The sponsors can contact the DFI's/Bank directly for financing the project. This Office is facing extreme difficulties in monitoring the data on new investments in textile industry as DFI's/Bank are firstly hesitant to part with the information due to their legal difficulties and secondly give this aspects a secondary importance.

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