ECC fails to garner support for draft textile policy 2020-25

Published October 12, 2021
A worker examines fabric at a textile factory. — AP/File
A worker examines fabric at a textile factory. — AP/File

ISLAMABAD: The Economic Coordination Committee (ECC) of the cabinet failed to muster support for the much-awaited draft Textile and Apparel Policy 2020-25 and constituted a sub-committee to resolve the issues before its next meeting.

The ECC meeting chaired by Finance Minister Shaukat Tarin once again failed to get commitments on an uninterrupted supply of subsidised gas and electricity to the value-added textile sector from the country.

The sub-committee – comprising representatives of Ministry of Commerce, Finance Division, Ministry of Industries and Production (MoIP), Power Division, Petroleum Division, Federal Board of Revenue and State Bank of Pakistan (SBP) – will review and present an updated policy before the ECC in a couple of weeks.

An official privy to the meeting told Dawn that in the original draft of the policy placed before the ECC in January 2021, the commerce ministry proposed an allocation of Rs150 billion for gas subsidy. However, this amount is not sufficient now as the cost of gas has increased many folds in the past few months.

Body formed to update plan after considering availability of gas and pricing issues

Moreover, there is another issue of availability of gas and government will be already facing strong pressure in winter to provide gas to domestic users. The committee will now come up with the availability of gas and pricing issues for the sector, added the official.

Earlier, it was proposed that an amount of Rs150bn will be allocated for providing gas at a concessionary rate to the industry. The government will provide re-gasified liquefied natural gas (RLNG) at $6.5 per million British thermal units (mmBtu) and system gas at Rs786 per mmBtu during the next five years.

However, the official said, that it was not possible for the government to provide RLNG at this rate anymore. Similarly, the government has proposed an amount of Rs200bn to subsidise electricity supply to the export sectors for the next five years. The electricity will be provided at nine cents per kWh.

As per the draft textile policy, the government has proposed cash subsidies and lower rates on utilities worth Rs960bn to boost production and exports of value-added textile products.

The proposed policy, which will be the third such policy, estimates three scenarios that the measures will lift the textile and clothing exports to a minimum of $15.7bn and a maximum of $20.8bn by end of the year 2025.

The ECC approved a summary presented by the Ministry of Information Technology and Telecommunication regarding the allocation of Rs2bn as a single line budget for Pakistan Software Export Board (PSEB), an apex government body, mandated to strengthen and promote the IT sector exports of Pakistan.

The meeting also approved the allocation of Rs4bn to PSEB for disbursement of cash reward incentives in order to incentivise IT exports and to encourage documentation of exporters/exports. The cash reward incentive shall be provided for the IT and IT-enabled services exporters promoting export proceeds through banking channels via the SBP allocated banking codes.

The ECC approved maximum provision of gas to Pak Arab at 58 million cubic feet per day (mmcfd) and Fauji Fertiliser Bin Qasim Limited at 63 mmcfd to ensure that the estimated demand for urea fertiliser is met through domestic production. The MoIP submitted a summary to the ECC to review demand for urea fertiliser during the Rabi season 2021-22.

The meeting was informed that the decision will stabilise prices of urea fertiliser and ensure its smooth supply throughout the country during Rabi season 2021-22 in order to achieve better crop yields.

The meeting was attended by Federal Minister for Industries and Production Khusro Bakhtiyar, Federal Minister for Energy Hammad Azhar, Federal Minister for Railways Azam Khan Swati, Minister of State for Information Farrukh Habib, Adviser to the Prime Minister on Commerce Razak Dawood and federal secretaries.

Published in Dawn, October 12th, 2021

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