ISLAMABAD, May 18 The government on Wednesday approved a support package for research and development of garment units manufacturing and exporting textile garments to increase their competitiveness in the international market.

The support package would be provided to these units falling under chapter 61 and 62 of the Pakistan Customs Tariff at the rate of six per cent of the fob value of exports subject to conditions, according to a commerce ministry notification SRO437 of 2005 issued here on Wednesday.

Commerce Secretary Tasneem Noorani told Dawn that the facility would help the garment units increase their competitiveness for getting greater market access in the international trade. He said the garment sector was a labour intensive sector and that the facility would encourage research and development in this sector.

The facility would be effective retrospectively from April 12, 2005.

According to the conditions for getting the facility, the exporting unit should be a member of any association registered with the Director Trade Organization (DTO), the ministry of commerce. The registered associations are: Pakistan Readymade Garments Manufacturers and Exporters Association; Pakistan Hosiery Manufacturers Association; Pakistan Knitwear and Sweater Exporters Association; and Pakistan Cotton Fashion Apparel Manufacturers and Exporters Association.

The units will have to spend the amount on research and development support on product development, skill development and training, upgradation of information technology and professional consultancy.

The garment units will show the expenditure in the annual accounts and balance sheets. The exporting unit should lodge its claims for research and development support payment with field offices of the State Bank’s Banking Services Corporation through authorized dealers within 30 days of the realization of export proceeds.

The association would certify the exporters for getting the facility. Before verifying the claims, the relevant association should carry out due diligence to ensure that the claim of an exporter was based on facts. They would scrutinize those claims more minutely which were based on exports to African and Gulf countries.

The admissible research and development support payment as approved by the field office of the SBP shall be made by crediting the account of the authorized dealer concerned, who shall pay the amount to the exporters within 24 hours of receipt of the credit in their account.

The application for the facility relating to zero period — for the shipments made between the April 12, 2005 and the date of issuance of this order — shall also be submitted by the authorized dealers as per the procedure given in this order.

The government might conduct audit of any exporter availing the facility. Following detecting of a fraud a fine and penalty might be imposed up to 300 per cent of the fraudulently claimed amount. The association will submit monthly reports, and any change in the scheme might be made at any time and commerce ministry might take action against any action taken in contravention of this order.