Govt moots measures to make textile sector competitive
19 May '06
2 min read
The Government is expected to reduce customs duty on furnace oil import for use in captive textile power houses in 2005-06 budget.
Government also has plans to establish special fund for upgrading industries and machineries, especially those involved in value-addition of products, according to a senior official.
A proposal for the same is expected to be submitted by the Textile Commissioner.
Higher electricity prices create difficulties for local textile sector to compete in international market.
Local textile sector too has established captive power houses for its power requirements for production purposes.
The rising furnace oil prices in international market make it highly disadvantageous to textile sector.
This was brought to notice of Dr Salman Shah, Advsor to Prime Minister on Finance and Revenues.
Dr Salman Shah directed Central Board of Revenue (CBR) to conduct cost comparison of electricity produced through natural gas or furnace oil and its financial impact if duties on furnace oil are reduced, the official added.
The official said, cost comparisons had been completed and a mechanism to lower rate of customs duty on import of furnace oil is to be evolved for captive power houses of the country.
This in turn will help local industries to reduce their cost of production, making them more competitive in international market.
Present the country is facing shortage of gas for electricity generation and three options of Iran-Pakistan-India (IPI) Gas Pipeline, Turkmanistan-Afghanistan-Pakistan (TAP) Gas Pipeline and Qatar Gas Pipeline (GUSA) are being explored for import of gas for industrial, commercial and residential consumers.
Elimination of textile quota under World Trade Organization's regime textile sector, particularly garment sector, is facing difficulties in international market.
These two measures will somehow help local textile industry overcome its challenges.
The CBR has already adopted zero sales tax rates for textile sector on their imports, local purchase and services in order to reduce its production cost.
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