LAHORE, Aug 15: The State Bank of Pakistan (SBP) has stopped accepting textile exporters’ claims for reimbursement of research and development (R&D) allowance owing to delay in the issuance of a notification, bankers and exporters said.

A private bank executive told this reporter on Wednesday that the central bank had stopped entertaining textile exporters’ R&D claims since Monday.

“Until last week, the central bank was receiving claims, but it suddenly stopped entertaining claims on the ground that the government has not yet issued a notice in this regard,” the banker said.

When contacted, the chairman of Readymade Garments Manufacturers and Exporters Association (PRGMEA) Ijaz Khokhar confirmed that their R&D claims were being returned by the central bank since Monday because of failure of the government to notify the facility announced in the budget and the trade policy for current year.

The government had allowed the textile apparel sector 6pc R&D allowance and home textiles 5pc in 2005 for the first time for one year to help exporters offset the impact of growing cost of production on their exports and sustain in the global markets. The three per cent R&D subsidy was extended to cover textile finishing industry the next year. The polyester industry has also been allowed 3.5pc subsidy from the current financial year.

Former chairman of Pakistan Hosiery Manufacturers Association (PHMA) Shahzad Azam Khan said the delay in the issuance of the notification is the result of internal tussle between the commerce and federal textile ministry over the power as to who would or should issue the notification.

Mr Khokhar said the PRGMEA had already sent letters to two ministries and the Federal Board of Revenue (FBR) requesting them to get the notification issued at the earliest.

“The delay in the notification is leading to a kind of panic among exporters as any further loss in time can result in liquidity crunch for many of them,” he said.