Pakistan's first national textile policy could lead to a 40% growth in exports and the creation of 3.5m jobs from a series of new measures aimed at improving the international competitiveness of the country's textile and clothing industry.

The National Textile Industrial Policy of Pakistan was approved by Prime Minister Shaukat Aziz on 6 August following consultations with textile and clothing stakeholders and trade associations as well as foreign consultants.

The textile policy, which is now ready for implementation, lays out short, medium and long-term goals to address a range of issues hindering production and export growth in the textile industry, including the availability of raw material, human resources, infrastructure development, attracting foreign direct investment, and reducing costs.

Plans include an increase in domestic cotton production, more value-added products, better productivity, and modernisation of existing plant and equipment.

It also intends to set up five new model garment factories, build a textile park to serve as a special economic zone for tax free production and export, and form the Pakistan Textile Research and Compliance Organisation.

Over the past six years (2000-2005) there were investments worth US$6bn in the Pakistan textile industry, but changes in government monitory policy and an inadequate infrastructure have until now halted further funding.

However, a further US$7.7bn in textile and clothing industry investment is expected over the next five years, boosting exports to US$24bn by the financial year 2013-14.

This will be helped by subsidised credit and refinance facilities provided by the country's central bank, the State Bank of Pakistan (SBP), to upgrade and expand factories. The lending rate for its Export Finance Facility (EFF) for textiles will be 7.5% - around 30-40% cheaper than commercial bank lending rates.

To tackle the shortage of skilled manpower, low product quality, lack of research and development, and excessive reliance on cotton, the 'Technology-based Industrial Vision and Strategy for Socio-Economic Development' provides a range of incentives for the textile sector.

The skills gap will be filled by professionals to cope with the challenges and the changing environment of international marketing, and common facility centres will be established, specialising in garments, knitwear, and sample development.

The industry has been clamouring for help since the end of quotas between WTO members at the end of 2004, and is now lagging behind neighbouring Bangladesh and India in the international market.