KARACHI, Feb 19: In another concession package, the textile industry is seeking a two-year abolition of virtually all the 41 taxes, surcharges and levies of the federal, provincial and local governments till June 2009.

For the same period, the industry is asking for a straight 25 per cent reduction in gas tariff, no increase in electricity tariff and continuation of research and development (R&D) rebate now being offered on export of readymade garments, home textile and printed, dyed and white fabrics.

Drawn up by a sub-committee of the National Textile Strategic Committee (NTSC) headed by the prime minister himself, the leaders of textile industry seek more concessions and incentives till June 2009 in the hope that the “bubble capacity” acquired by India, China and many other countries to get a foothold, after opening up of the world export market in January 2005, will be levelled off and Pakistan may be able to get a breakthrough.

The financial impact of the fresh demands of the industry, incorporated in the new package drawn up by the sub-committee led by Mr Tariq Sayeed Saigol, will be assessed in a meeting of textile industry leaders and the officials on February 27. The industry and market analysts put it anywhere from Rs30 billion to Rs50 billion a year.

Pakistan’s textile industry has already been given a package of about Rs25 to Rs30 billion concessions from a previous deal made in August 2006.

The total impact of all these concessions — from the previous one and the fresh one being placed before the government -- will be anywhere from Rs60 to Rs80 billion in a year in a country where according to government’s own admission virtually 25 per cent population is living below poverty level.

Besides, about 30 to 40 per cent population is said to be living just above poverty level that remains vulnerable and can be pushed down below poverty line any time.

More than Rs800 million rebates have already been given to the fabrics and home textile exporters from July to end January by way of research and development. No figures are available of the amount offered to readymade garments and knitwear exporters that are offered six per cent research and development rebate.

The government has swapped a substantial quantity from more than Rs30 billion loans. The textile industry is already being offered a reduction in export refinance rates.

Under the original notification, the textile units, that take benefit of R&D rebate on export of fabrics and home textile, were asked to invest the subsidy amount on: (1) product development, (2) skill development and training, (3) Up gradation of information technology, (4) professional consultancy, (5) market research, (6) technical up gradation of production lines, (7) environment improvement, (8) resource conservation, (9) production efficiencies and (10) participation in exhibitions.

No government agency has informed the public how many textile units that benefited from Rs800 million rebate in the first seven months invested in any of the prescribed areas or the money has been passed on to the foreign buyers. .

Besides, a virtual abolition of all 41 federal, provincial and local governments taxes, levies and surcharges plus the swapping of outstanding loans till end December 2006, a cut in gas tariff and concession in electricity rate, the Tariq Sayeed Saigol committee also wants duty free import of processed fabrics, accessories, printing screens, dyes and chemicals for garments and home textile sectors.

Three per cent R&D rebate is being demanded on processed fabrics and accessories being used by garments and home textiles that are to be exported.

The industry wants inclusion of polyester fibre in the DTRE scheme for complete zero rating and also allowance of duty drawback on PSF and filament-based products. All chemicals and dyes, including caustic soda be eligible for a drawback as deemed import.

The committee is also asking for a 10 per cent capital grant on all new investments on weaving onwards and development of long-term financial products for lending to the textile industry.

The textile leaders want suspension of customs duty on import of textile machinery and electric generators, zero rate customs duty till end June 2009 on spares and accessories by allowing a 0.5 per cent drawback of the FOB value of exports.

The committee has offered many other recommendations and proposals that suggest setting up of fumigation arrangements at all points of entry into Pakistan, introduction of genetically modified BT cotton technology for higher cotton yield, develop ELS varieties, promotion of clean cotton programme.

It calls for a review of polyesters’ manufacturers demand for increase in tariff protection from 6.5 per cent to 8 per cent and filament manufacturers’ demand of increasing tariff protection from 7 per cent to 10 per cent.

The government has not given enough weight to textile industry demands at the end of 2005-06 but it got panicky when textile exports reported a fall in the initial period of 2006-07 and reports of closure of textile units.

Textile tycoons pressurise government with threats of closure of their units, defaults in bank loans and suspension of business, which can cause unemployment and bankruptcies of banks that can cause an all-round economic crisis.