ISLAMABAD, Feb 19: The government doled out more than Rs30 billion to textile exporters during the last over two years under the head of six per cent research and development support for subsidising consumer prices of textile and clothing products for their sale in the markets of rich countries.

Sources said despite this huge amount of subsidy, the pace of growth in textile exports did not accelerate, which remained stagnant at four per cent between April 2005 and Jan 31, 2008.

This amount is expected to reach Rs50 billion by the end of June 2008, which is the last date for availing the facility if not extended.

An official source in the ministry of textile confirmed that a single unit was not added to the existing strength of textile mills, and instead a large amount of subsidies was diverted to set up industries in other sectors i.e. cement, sugar and power generation.

The fact was also clear from the official data which showed that textile and clothing exports declined by five per cent during the first half of the current fiscal year over last year.

Similarly, import of textile machinery is also on the decline for the last couple of years. A 30 per cent dip alone was recorded in the first half of the current fiscal year over last year.

The official, however, agreed that it was true that some industrialists might have imported machinery for upgrading their production capacity and quality, but no new mills were set up during the last three years.

According to the official, it was unfortunate for the survival of any industry, like textile sector, where flow of money was squeezing during the last three years.

The textile ministry has no record to assess the impact of subsidies on increasing competitiveness.

The sources said though Pakistan is the fifth largest cotton producing country, only five per cent of cotton has been made available to the value-added sector, which ensures maximum employment and huge remittances.

Analysts recommended that the new government should revisit the policy of subsidies which should be result-oriented and should also be linked with increase in export proceeds.

It should also be linked with enhancement of competitiveness of products and introduction of new products.

They demanded that it should not be given to exporters for subsiding prices of textile and clothing end-products, which would only benefit consumers of rich countries.

With this decline in textile exports, it is anticipated that annual export target of $19.2 billion will not be achieved by the end of June 2008. The last two years’ export targets have also not been met despite hefty growth in imports, which is now expected to be around $35 billion by the end of the current fiscal year.