KARACHI: The government plans to enhance duty drawback rate on export of value-added textiles to compensate exporters against Research and Development (R&D) support that was withdrawn last year.

Similarly, some other schemes would also be taken up to facilitate and encourage textile apparel exports with opening of warehouses and marketing offices aboard.

According to Ministry of Textile Industry sources, the government pledged to set up an Export Investment Support Fund (EISF) of Rs40 billion to help boost textile exports as part of the federal budget for 2009-10.

The ministry had also put up summary before the government for the withdrawal of 12.5 per cent cross subsidy on gas which would benefit mainly to spinning sector.

In addition the sources said, Rs500 million had been earmarked for three per cent interest rate subsidy to textile industry and Rs510 million would be used to establish necessary infrastructure to support export-oriented textile and clothing units.

Taking serious note of decline in textile exports during the outgoing fiscal year, the government also planned to give priority in allocation of gas and electricity as it had been realised that textile and clothing sector was now first priority of the economic managers.

There were allocations for textile and garments city projects. The prime minister had recently launched infrastructure development of Pakistan Textile City in Karachi and soon Faisalabad garments city project would be launched.

Giving details the sources said that Rs246 million had been earmarked for Textile City in Karachi, Rs207 million for Faisalabad garment city, Rs25 million for Lahore garment city, Rs17 million for upgrading textile institutes and Rs15 million for export development plan.

Textile ministry sources disclosed that there was also a proposal for the disbursement of three to four per cent mark-up on the investment against plant and machinery in textile sector similar to Indian Technology Up-gradation Fund (TUGF) scheme in the new Textile Policy to be announced soon.

Dr Mirza Ikhtiar Baig, the federal adviser on textiles, told Dawn that 67 per cent of the EISF would be spent on textile clothing industry with a view to consolidate value addition sector.

He further said that various budgetary measures had been taken to bring down the cost of production and the government had removed Federal Excise Duty (FED) on import and supply of viscose staple fibre. ‘Steps will be taken to ensure that exports of textile and clothing become zero rated in true sense,’ he added.