The task force also advocated for enhancing cash incentives to 10 percent from the present five percent for a five-year period to 'develop the textile sector more competitive in the international market'.

The high-powered 13-member inter-ministerial task force committee yesterday submitted its report to Prime Minister Khaleda Zia at her office here.

"Aimed at increasing the competitiveness of textile sector through overall development of the textile sector, a long-term and effective strategy should be devised", the task force, which was constituted on July 27, 2005, recommended.

The task force was represented by a group of policy makers, government officials, representatives from the entrepreneurs and academics as well as experts. It completed the recommendation in four sittings, which were held in between December last year to May this year.

The primary textile industries in the country have attained the capacity to supply 80 percent exportable fabrics in knit and 40 percent in woven sub sectors, while meeting over the major portion of local demand simultaneously. Locally produced denim fabrics have attained the capacity to meet 80 percent export demand.

Besides, the textile sector is earning 85 percent of the total export. The government has set a target to earn 10 billion US dollars by 2010. To achieve double-digit export goal, the report has laid emphasis on giving extra importance on the development of woven and processing sub sectors.

The task force committee accepted the 11 proposals, excluding one related to different slabs of income tax, unanimously.

In a 26-page report, the committee has asked the government to continue the existing loan policy in the textile sector based on 70:30 investment and equity proportion by the private and public commercial banks and financial institutions. At present the private banks and institutions are charging between 11 and 13 percent interest on the loans, which are being given on textile investment.

In the committee meeting, the Bangladesh Textile Mills Association (BTMA) suggested alleviation of the existing disparity between the private and public financial institutions on providing textile-loans.

The nationalised banks are charging 9 percent interest on textile sector credit.

The task force also proposed continuation of the present tax holiday. In other proposals made in the same package, the task force requested the government to set up centrally located environment-friendly effluent treatment plants (ETP) in different zones with different financial incentives as well as to establish exclusive high-tech park, readymade garment village and industrial parks to attract foreign investment.

The task force proposed for duty and tax-free import of all kinds of spares, dyes and chemical and sizing materials related to textiles. Despite the present system allowing import of a total of 219 spares items in the textile sector without import duties and VAT on the certification by BTMA, the importers have to pay infrastructure development surcharge and income tax in advance.

On the other hand, a total of 49 dyes and chemical items are being imported without import duties on the basis of BTMA certificates at present, while VAT, advance income tax and infrastructures development surcharge are being paid.

There are now 247 spinning mills in the country. During 1929 to 1947, 11 textile mills were established in the then East Bengal, another five mills during 1947 to 1958.

The number of textile mills increased to 74 in between 1958 and 1971. The government established 12 mills after 1972, but majority of the mills, which were nationalised after independence, became sick.

Since the denationalisation in 1982, a total of 247 mills were set up with 519 million spindles. The government owns another 23 spinning mills with 490 thousand spindles of which many are closed or are running on lease, said the report.

The local demand of fabric in the country is estimated at 1600 million meter annually, which is based on 10 meter per head annual demand.

There are 353 gray cloths manufacturing units in the country and these mills can produce 900 million yards of cloths. In addition to that, 1065 speacialised textiles and power looms are producing 330 million yards fabric annually.

The country has about four lakh 98 thousand handlooms with an annual manufacturing capability of 837 million meter fabrics.