ISLAMABAD, July 10: The talks between the business community and the government remained inconclusive on Thursday as the finance ministry sought a complete report on financial implications of a subsidies package demanded by the textile and clothing industry before making any commitment.

Sources said Finance Minister Syed Naveed Qamar asked the FPCCI delegation to come up with detailed fiscal impact of each and every demand of the business community so as to examine it in the light of overall economic situation in the country and the government’s fiscal space.

“The government lacks fiscal space, which does not mandate any cash support to any sector, including textile and clothing during the current fiscal year,” the minister categorically informed the textile tycoons, who are desperately pushing for getting extension in existing R&D support or a new scheme of subsidies for the sector.

The government dolled out billions of rupees of subsidies to textile and clothing sector since April 2005 to increase its competitiveness. It did help in the initial years but later on it became a lucrative business for some unscrupulous exporters to draw subsidies without increasing competitiveness or market penetration.

With these subsidies, Pakistan has been labelled as the low quality supplier of textile and clothing products in the international markets as subsidies resulted into lowering of unit price lesser than all textile producing countries, including Bangladesh.

FPCCI president Tanveer Shaikh was heading the delegation, which includes among others All Pakistan Textile Mills Association (Aptma) representatives.

Minister for Textile Industry and Commerce Ahmed Mukhtar also attended the meeting.

Meanwhile, Aptma announced deferment of the strike call for Friday. Mainly textile associations from Faisalabad accompanied by some chambers announced a strike call for July 11 to press the government for withdrawal of recent increase of 68 per cent in gas tariffs.

A source in the finance ministry said the finance minister informed the delegation that the petroleum ministry would work out the financial details of the proposal in case of equating the rate of captive power plants at par with normal industrial rate.

The source said that Mr Qamar asked the textile industry to make detailed analysis of the proposed package. The report will be discussed in the next meeting before sending it to the Economic Coordination Committee (ECC) of the cabinet meeting to be headed by Prime Minister Yousuf Raza Gilani.

A senior official in the finance ministry requesting not to be named said the government cannot commit anything off the cup. “We know about their problems but we need to have financial details of the package,” the source added.

The source said anything decided will be announced in the upcoming trade policy expected to be announced on July 18.

FPCCI president Tanveer Shaikh told Dawn after the meeting that proposed rate of duty drawbacks were discussed with the senior officials led by finance minister. He said the issues discussed also include the mark up rate for the industry.

He said that such kind of decision can only be taken at a higher level. He hoped that government will consider their demand. However, he said, that the FPCCI has not given any strike call. “We have nothing to do with the strike call. We believe in negotiations,” Mr Sheikh said.

According to the source, the textile representative informed the meeting that they were facing tough competition from Bangladesh and Jordan for being having duty-free market access in the United States.

They said that with the initial subsidies they managed to maintain their market share in the USA and EU following the abolishing of quota regime on January 1, 2005.