Pakistan is extending subsidised loan credit to the textile sector.
The Export Financing Scheme (EFS) has increased the credit limit for textile exports. The Long Term Financing Facility (LTFF) for investment in the textile sector has been enhanced. The loan credit under the EFS will be available at a subsidised mark-up of three per cent and under LTFF at five per cent.

In addition, the project financing limit will be raised. This will not only help cover the financing cost but also encourage large scale plants having an edge in economies of scale.

Textile exporters in Pakistan were facing difficulties as the share of the subsidised credit limit had dwindled to 27 per cent from 41 per cent in a year. The sector has been relying heavily on commercial loans. The discount rate was raised to 10.25 per cent from 5.75 per cent during the same period. More importantly, during the last year, the currency had devalued 35 per cent against the dollar. The cost of financing for textile projects has substantially increased along with the requirements of working capital and in the last five years imports of textile machinery have remained almost stagnant.

Textile exports make up around 60 per cent of the country’s total exports.