KARACHI, Aug 11: Textile tycoons are losing all hopes to get cash subsidy on export of textile products in the current fiscal year after the scheduled meeting of Economic Coordination Committee of the Cabinet on Tuesday (today) has been put off without any announcement.

The meeting was expected to discuss a textile package with provisions for subsidy support on export of readymade garments, home textiles and fabric.

“Political events have overtaken business issues,” a top garment exporter remarked with a reference to impeachment move launched by the ruling alliance that has put many important business issues on the back burner.

One of such business issues being described as “matter of life and death” for sinking textile industry is the continuation of research and development cash subsidy on exports.

The government started offering this subsidy in 2005 on garments export followed by its extension to home textiles and on fabrics with an announcement that no such facility would be offered after June 2008.

But as the situation developed, oil prices went sky high, utilities cost increased and production cost witnessed a quantum jump, the powerful textile lobby asked for even high subsidy support.

Accordingly, the Economic Advisory Council, which include representatives of big business including from textile houses is reported to have suggested a 9 per cent cash subsidy for apparels and garment export in 2008-09 against 6 per cent that was being offered for last more than 30 months before July 2008.

The Council is also reported to have proposed increase in subsidy on home textiles from 5 to 7 per cent on fabric from 3 to 5 per cent.

The federal finance ministry is reported to have turned down this proposal on the ground that there has virtually no fiscal space available to provide Rs25 to Rs30 billion subsidy support on textile export.

The textile industry lost its case after its export showed a negative growth of about three per cent in 2007-08 and yet the country met the overall export target of $19 billion set for the fiscal year.Textile tycoons were upset when the federal finance minister contemptuously ignored their issues in the budget speech in June. The commerce and textile minister too ignored them later in Trade Policy speech.

Tenacious as they are, the textile industry leaders kept lobbying and finally the Pakistan Apparel Forum managed to win over finance minister Syed Naveed Qamar on their side.

Textile business sources say that a government summary pertaining to their matters particularly cash subsidy support did come up for discussion in the ECC meeting on July 2, but it was deferred for discussion till July 9 by the prime minister. Since then, the proposal for supporting textile is being exchanged by the textile and trade ministry with finance with no result.

The textile business is now more confused and somewhat bitter too as conflicting reports are coming from the finance ministry.

One report suggest that government will offer about Rs15 billion subsidy to garments and apparels only as these segments are said to be generating jobs at very low rate of investment besides fetching highest amount of foreign exchange in export.

The report suggests that subsidy support will be offered to all segments of textile but at a much reduced rate.