The government of Pakistan has authorised the payment of a PKR7.5bn (US$90m) interest rate subsidy to the textile industry during fiscal year 2009-10.

Under the scheme banks will provide subsidised loans at 5% interest rate to export oriented textile units to finance their export shipments.

In addition, all of the industry's existing long-term loans will be converted into the State Bank of Pakistan's Long Term Financing Facility (LTTF) scheme, where interest rate is charged almost 5% lower than the prevailing interest rates in the country.

The initiative was included in the country's five-year textile policy (2009-14) to try to encourage further investment in the textile industry.

Akber Sheikh, chairman of the All Pakistan Textile Mills Association (APTMA), welcomed the move and said it would help boost the country's textile exports.