Key Initiatives under Textiles Policy 2009-14

Cross-cutting Issues

A Textiles Investment Support Fund (TISF) will be established for incentivizing investments in specific areas including modernization of machinery and technology, removing infrastructural bottlenecks, enhancing skills, better marketing and use of and communication technology (ICT). Through this fund following initiatives will be undertaken:

Technology Up-gradation Fund (TUF):
To facilitate new investments and upgradation of technology Government will contribute part of the investment financing or part of the investment cost through the TUF. Under this scheme, for capital-intensive projects, government will pick-up 50% of interest cost of new investment in plant and machinery with a maximum of 5%. For small investments, government will contribute up to 20% of capital cost as a grant. For this purpose, Government has kept a budget of Rs.1.6 billion in the current financial year for this scheme. This will increase to Rs. 17 billion by 2014.

Infrastructure Development:
Based on the experience from textiles city and garments cities models, Government plans to set up more such industrial estates to ensure availability of all industrial amenities at reasonable cost.

Clusters will be developed where small investors can set up their facilities. The clusters will be provided with laboratories, product development centres, research centres, common sheds etc.

With a view to bridging a major gap in compliance support will be provided for setting up effluent treatment plants for the existing industry.

Schemes for common warehousing, storage and marketing facilities will also be launched to ensure timely and cost effective availability of inputs.

An amount of Rs. 1 billion is being allocated this year for infrastructure development in the areas just mentioned and all measures will be initiated on public-private partnership model.

Skills Development:
A comprehensive training plan will be developed to upgrade the overall pool of skills in the textiles value chain in close consultation with the industry and will be implemented during the next five years.

Facilities will be provided for audits to enhance productivity and efficient processing. Government will also support acquisition of foreign expertise in enhancing local productivity and supervisory skills and for this purpose Government has exempted foreign experts from income tax.

Government will allocate Rs. 1 billion during the current year for skill development initiatives.

Standardization:
A legal framework will be developed to specify standards and testing requirements, prescribe disclosure requirements and other matters relating to the practices and methods relevant to the sector. This has become necessary in view of compliance standards imposed by major importing countries.

Zero Rating of Exports:
Government recognizes the principle that exports should not be taxed. Efforts will be made to identify all direct and indirect levies that add to the cost of doing business without appropriate compensation so that remedial measures can be adopted.

Rationalization of Tariff Structure:
The principle of cascading will be implemented while ensuring adequate protection to the local industry and removing anomalies.

Removing Regulatory Bottlenecks:
An extensive exercise will be undertaken covering all sub-sectors, to identify rules, regulations, procedures, levies and other regulatory constraints that hamper the development of the sector. Based on this exercise, appropriate measures will be adopted to simplify or remove such irritants. 

Market Access:
Government will be expending concerted efforts to secure due access for Pakistan in some of the key destinations of our exports. Preferential access as well as FTAs in such markets will be the focus of such efforts.

Marketing Support:
Government will provide necessary support for branding, grading, labeling and such other activities that would add value to the textiles chain.

Export House Scheme:
To initiate a process of building big export houses, Government is planning to treat local sales of yarn and fabrics to large exporter as deemed exports. For this purpose, small producers will get 1% drawback on levies and unadjusted taxes on sales to the export houses. An amount of Rs. 2 billion has been budgeted for the current year for this scheme.  

Marketing Insurance Scheme:
Government will introduce an insurance scheme to protect our exporters against unforeseen losses, which may arise due to failure of the buyer, bank or problems faced by the buyer country. A working group will be set up to develop a feasible scheme for the consideration of the government. This scheme will help remove uncertainties currently faced by the exporters, especially in a global markets hit by a massive financial crisis.

Information and Communication Technology:
Government will also support efforts aimed at enhancing efficiency through the use of information and communication technology in such fields as development of web-sites and e-commerce platforms.

Sub-sector Initiatives

The policy will also focus on certain sub-sector issues from fibre to garments including ginning, spinning, weaving, knitting, processing, fashion designs, handloom and handicrafts, carpets and technical textiles etc.

Specific schemes will be launched, mostly on public-private partnership basis, to upgrade and improve these sectors.

Fibers:
A comprehensive training and capacity building program will be developed to establish a system in the private sector for grading and classifying cotton.

Measures will be introduced for production of long staple cotton for value added products and to meet domestic demand for high quality fabrics, including introduction of BT cotton on priority basis. Simultaneously, measures will be introduced for cultivation of organic cotton in new areas to increase value and production.

The policy will also aim at providing a paradigm shift and concentrate on other high value added fibres, especially manmade fibres, to enrich the export mix. Necessary incentives will be provided to encourage investment in additional capacity in the MMF industries at competitive prices. NTC will determine required protection for such industries.

Measures will also be taken to develop other vegetable fibres (jute, flax etc.), wool and sericulture for supporting diversification within the natural fibres.

Ginning:
A comprehensive scheme will be prepared and implemented for conversion of ginning industry into an efficient ‘service sector’ to benefit the growers.

Government will be provided financial and technical assistance to those who would be willing to use more efficient technology.

Filament Yarn:
There is a need to improve efficiency, competitiveness and economies of scale in the filament yarn industry. Government will also ensure skills development and research through Synthetic Fiber Development and Application Centre (SFDAC) to facilitate the manufacturing of finer filaments for value addition. To make industry further viable mergers and acquisitions will be facilitated along with consolidation. NTC will determine the required protection needed for the healthy growth of this industry.

Spinning:
Investments in rotor technology and specialized attachments like compact spinning, lycra etc. will be encouraged along with ring spinning to attain economies of scale. To overcome the problems of power shortage, measures would be taken to incentivize power generation by the mills.

Weaving and Knitting:
Assistance will be provided for increasing capacities, up-gradation and de-fragmentation. Cost-sharing and technical assistance will be provided to encourage Investment in shuttle less looms, knitting and power looms sector up-gradation. Common working sheds and clusters will be developed to ensure availability of utilities and to encourage consolidation of non-mill sector.  

Non-woven:
The non-woven sector is one of the emerging sub-sectors having considerable uses in value-added products. To encourage this sector, training modules will be developed to impart knowledge and skills.

Processing:
Policy will support new investments in processing industry, especially in the processing of narrow-width fabric and knit dyeing. Up-gradation of existing machinery and technology will also be supported.

Home Textiles:
Home Textiles is the first stage of high value-added products. Of late, Pakistan has made significant advances in this area and its products are ranked amongst the best. However, the efforts will have to focus on fashion and design and branding.

Garments:
Garments sub-sector is the ultimate value-spinner for the textiles chain. The sub-sector faces a number of challenges that hamper utilization of its fullest potential.

The policy will address the challenges to facilitate promotion of this important sub-sector. In particular, government will endeavor to make this sub-sector the manufacturing hub for highest value added products including availability of trained manpower, promotion of fashion designs and support in development and marketing of brand names. Entrepreneurs will be encouraged to take maximum advantage of abundant labor and for this purpose sourcing and marketing training will be provided

along with the establishment of product development centres. To ensure requisite protection to the domestic industry, steps will be taken to eliminate illegal imports of the value added products, especially fabrics and garments.

Fashion and Design:
To promote value added industry, there is a critical need to develop the fashion and design industry. This will include increased number of fashion institutes, faculty development, industry linkages, special programs for local brands and designers recognition, affiliation with international fashion institutes, dissemination of information on new fashion trends, product development centers, introduction and availability of new fibres and their processing etc. on public-private partnership basis.

Technical Textiles:
Technical textile is an emerging area of high value addition where given our strength in heavy clothing we can claim a significant share of the world market.

Government will develop a proper strategy for the promotion of technical textile in the country. For this purpose an exclusive centre of excellence.

Handloom and Handicrafts:
Training and facilitation will be provided to strengthen traditional craftsmanship for production set-up, sourcing raw materials and marketing.

Steps will be taken to identify clusters for the traditional textiles within each sub-sector.

Arrangements will also be made to link up these clusters with fashion schools so that new designs and modern trends are assimilated in the traditional crafts.

Carpets:
Government will facilitate consolidation and adoption of new technology in dyeing, finishing, and testing and product development in carpet industry. To enhance production and exports, assistance will be provided to ensure wider acceptability of Pakistani carpets, availability of fine raw materials, and establishment of research and development, testing and product development centre.

Promotion of joint ventures with leading international brands will be a key objective of the policy. Government will provide appropriate incentives to encourage such initiatives.

Intensive training and awareness campaigns will be initiated to disseminate information on comparative benefits of upgrading machinery and using domestic resources.

Viability studies for production of textiles dyes, chemicals and accessories will also be initiated. Based on these studies measures will be introduced for encouraging establishment of industries considered economically viable.

The Textiles Policy represents a new beginning for the textiles sector. Through this policy, the government has not only set out a road map for the development of this sector but has provided the necessary support without which rapid progress of this sector is not possible. It is now the responsibility of the private sector leadership sector, exporters, labors and others connected with this sector to transform the vision of the policy into reality. The exports target of $25 billion is ambitious but not beyond our potential.