Pakistan suspends subsidies for textiles and clothing

The federal government of Pakistan has suspended subsidies for its textiles and garments industry in order to control its fiscal 2011-2012 budgetary expenditures.

The Pakistani Textiles and Apparel Industry Subsidy Program is part of Pakistan's five-year national textile policy from 2009 to 2014. However, for the allocation of state budgets for the fiscal year from July 1, 2011 to June 30, 2012, the Pakistani government did not plan to increase the budget expenditure to its textile and clothing industry.

The affected textile and garment industry-related programs in Pakistan include support subsidies for the textile industry investment case, local tax rebate programs, R&D subsidy programs, reduction of VAT, and other textile policy measures.

Pakistani Textile Minister Shahid Rasheed has confirmed that the Pakistani Local Tax Rebate Scheme (DLTL) will be cancelled on June 30, 2011.

According to the Pakistani textile policy, the total budget allocated by the Pakistani government in the textile and apparel industry for the past two years was 8.2 billion rupees (US$957 million), while the amount of tax refund approved by the budget was only 17.5 billion rupees (US$204 million).

Pakistan Textile Exporters Association (PTEA)** Wasim Latif warned that if the DLTL tax rebate plan is not extended, Pakistan’s textile exports will fall, and subsidies are the key to help Pakistani companies remain competitive in the international market. .

According to Pakistan's five-year national textile policy announced in 2009, it aims to make its textile and garment export value reach US$25 billion by 2015.