LAHORE, May 28: Readymade garments exporters have called for continuation of the support being extended to the value added clothing sector in the shape of 6 per cent Research and Development (R&D) at the current rate for at least another three years.
“The R&D support is critical for the clothing industry to maintain its share in the world markets,” Pakistan Readymade Garments Manufacturers and Exporters Association (Prgmea) Chairman Ijaz Khokhar told a press conference on Monday.
The government had given the R&D facility to the clothing sector at the rate of 6 per cent for one year in the fiscal 2005-06, but extended it for another year in the 2006-07 budget.
The clothing sector will continue to receive the R&D support for yet another year, that is, FY2007-08, but at half the current rate.
Mr Khokhar said the reduction in the subsidy would hit the garment exports hard and make the exporters lose a substantial portion of their market share.
“The government should assure the garment exporters that they will continue to receive the facility at the existing rate for another three years so that they could plan their future export strategies accordingly,” he said.
He said it was important to support the garments industry because it was a big employer and a major earner of foreign exchange. The woven industry is expected to increase its exports to $1.412 billion this year from $827 million in 2001.
The government had extended the R&D facility to the clothing sector in view of the heavy financial support being given by India, China, Bangladesh and other competitors to their respective textile industry.
According to exporters Pakistan’s textile exports are 10-15 per cent costlier than their competitors like India and Bangladesh owing to internal factors like high credit, utility, and transportation costs as well as external factors like domestic subsidies and special treatment given by the US and the European Union to textile imports from countries like Bangladesh.
Mr Khokhar said some 15 per cent small and medium size woven garment manufacturing units had closed down out of 1,200 units across the country due to higher production costs and uneven playing field in the international market.
Prgmea’s Punjab leader Sajid Minhas wanted the government to declare all units exporting 70 per cent of their production as export processing units to enable them to import raw materials and accessories at zero rated duty as well as to bypass social compliance issues.
He also urged the government to help them in setting up effluent treatment plants at all major export-oriented industrial clusters.
Mr Khokhar said the government must assist the exporters in finding new markets as well as consolidating their presence in the existing markets.
He said the government must divide the textile sector into three sub sectors – a) ginning, spinning and weaving, b) clothing and apparel, and c) home textiles.
“If we want to improve our textile exports and get a bigger share in the global textile trade, which is tipped to rise to $800 billion in 2014 from the current $375 billion, it is important to devise policies and give incentives according to the specific needs and requirements of each sub sector.
