A Fund to support the textile industry is being created

    Industry 25 January 2022 923

    The President of Uzbekistan signed Decree No. UP-53 dated January 21, 2022 "On measures to stimulate deep processing, production and export of finished products with high added value by textile and sewing and knitting enterprises".

    Under the Export Promotion Agency under the Ministry of Investment and Foreign Trade, a Fund is being created to support the textile industry without the formation of a legal entity.

    Sources of income generation of the Fund:

    • funds allocated from the Reconstruction and Development Fund;
    • fees charged for the export of cotton yarn and knitted fabric across the customs border of Uzbekistan;
    • charitable funds of individuals and legal entities, grants from international financial institutions and foreign organizations;
    • other sources not prohibited by law.

    From February 1, 2022 to January 1, 2025, the procedure is established according to which:

    enterprises that have implemented projects for the production of dyed linen, mixed and dyed fabric products in the Republic of Karakalpakstan and the regions are allocated subsidies in the amount of 10% of the cost of equipment purchased under these projects, but not exceeding the equivalent of 500 thousand US dollars, at the expense of the Fund.

    At the same time, it is necessary:

    • purchase new equipment within the framework of the above projects;
    • do not include in the cost of equipment the costs of delivery and other additional services;
    • have a certificate of commissioning of the project;
    • enterprises purchasing equipment for the production of dyed linen, mixed and dyed fabric products, as well as yarn, in which artificial fibers occupy more than 80%, are allocated loans in foreign currency to pay a 15% initial payment for up to 7 years, including a grace period of 3 years, at a fixed deposit rate, with the addition of a bank margin of 1%;
    • enterprises exporting dyed linen and fabric, ready-made sewing and knitting products are allocated loans in foreign currency up to 3 million US dollars for pre-export financing, including replenishment of working capital, for up to 1 year, including a grace period of up to 9 months, at a fixed deposit rate with the addition of a bank margin of 1%;
    • enterprises whose total revenue from the sale of dyed linen and fabric, finished sewing and knitting products, including through a commission agent (attorney), the share of exports of these products is at least 80%, are entitled to:
    • payment of social tax at a tax rate of 1%;
    • deferral of repayment of debts on property tax of legal entities for up to three years.

    It is also determined that funds received from the following sources in the period from February 1, 2022 to January 1, 2025, are sent to the Fund:

    • 25% of the fees charged for the export of cotton yarn and 100% of the fees charged for the export of knitted fabric. At the same time, these funds are allocated to subsidize part of the cost of equipment purchased within the framework of projects for the production of dyed linen, mixed and dyed fabric products;
    • 70% of the fees charged for the export of cotton yarn. At the same time, these funds are allocated to subsidize enterprises exporting finished sewing and knitting products (HS code 61-63).

    The Reconstruction and Development Fund, at the request of the Agency, was instructed to allocate funds to the Fund in the amount of US$ 25 million free of charge to subsidize part of the cost of equipment purchased within the framework of projects for the production of dyed linen, mixed and dyed fabric products.

    If necessary, the Ministry of Finance will additionally allocate funds in the amount of up to 250 billion soums from the republican budget to the Fund for these purposes in 2022.

    At the same time, the deadlines for the provision of compensations and guarantees by the State Fund for Business Support for loans received by exporters in commercial banks for pre-export financing are extended for a period until January 1, 2024.

    The document was published in the National Database of Legislation and entered into force on 21.01.2022, reports "Norma".