KARACHI, June 30: The government has decided to allocate Rs30 billion towards duty drawback to be allowed on textile exports during 2008-09 on domestically acquired inputs, including taxes paid on gas and electricity, official sources said on Monday.

The duty drawback will be provided to the textile industry to replace research and development (R&D) support, which is contingent upon export performance. Such support is considered to be a subsidy, which is prohibited under the WTO agreement.

However, the government strongly feel that textiles and clothing industry badly needs support under the present difficult and uncertain conditions in the world market owing to downturn in the economies of major importing countries.

According to sources a summary has been prepared for the allocation of Rs30 billion towards duty drawback for the textiles and clothing industry and will be put up for approval before the Economic Coordination Committee (ECC) meeting being held in Karachi on Tuesday.

The sources said that the drawbacks would only be allowed on those products, which do not require further value addition. Furthermore, the drawback on locally acquired inputs would not affect the eligibility of exporters to claim the normal duty drawback, they added.

For availing duty drawback by manufacturers-cum-exporters the criteria will be having an in-house facility of at least cutting and stitching and there will be different slabs for FoB value of exports have to be approved by the ECC.

The sources said apparel exports up to $15 million would get 3.5 per cent and home textile/towels 2.5 per cent drawback. Apparel exports from $16 to $30 million would get 4.5 per cent and home textile/towels 3.5 per cent. Apparel exports from $31 to $60 million would get 5.5 per cent and home textile/towels 4.5 per cent drawback. Apparel exports from $61 to $100 million would get 7 per cent and home textile/towels 5.5 per cent. Exports of apparel and home textile over $101 million would get 9 per cent and 6.5 per cent, respectively. A criterion for getting drawback by manufacturers-cum-exporters of dyed and printed fabrics has been laid down for the ECC approval.

Exports up to $25 million would get 0.5 per cent drawback and those from $26 to 50 million 0.75 per cent.

Fabrics exports from $51 million to $100 million would get 1 per cent drawback and from $101 to $200 million 1.5 per cent drawback and above $201 million 2 per cent drawback.

The industry sources fear that fixing of slabs for getting drawback would totally push out small and medium exporters, who constitute around 91 per cent and their exports are mostly around $3 million per annum.