Tashkent, Uzbekistan (UzDaily.com) — Under the chairmanship of President Shavkat Mirziyoyev, a videoconference was held to address further support for the textile industry, which accounts for 3% of the country’s economy and 14% of industrial production.

Over the past five years, 396 large enterprises worth a total of US$3.5 billion have been commissioned in the sector, with production volumes reaching US$10 billion. The industry employs more than 500,000 people, representing 20% of the country’s industrial workforce.

At the same time, there has been a slowdown in production and export indicators, which, given the global situation, requires urgent measures to maintain output, jobs, and export positions.

The decline in global cotton prices, which began in 2022, has created difficulties for clusters: over the past three years, the price has dropped from US$3,000 to US$1,500 per ton.

Entrepreneurs have been using the new harvest to pay off old debts. To address this, the preferential loan for purchasing cotton raw materials, originally issued for 2022–2023, has been extended three times; last year, a subsidy of 1 million soums per ton was allocated to support the price of cotton.

The head of state stressed that the sharp drop in global market prices did not begin today, and that the economic bloc, together with scientific organizations, should have prepared in advance various scenarios and solutions for this issue.

The meeting also criticized certain “operators” who, lacking sufficient processing capacity, engage in “speculation” on cotton using cheap state resources.

Textile enterprises’ debt on commercial loans totals US$2.2 billion. Moreover, 90–95% of these loans are in foreign currency, while only 16% of enterprises hold an international certificate.

“In such conditions, how will enterprises be able to compete in the foreign market and repay their loans?” the President asked.

Although each region has 10–15 producers of finished goods, their cooperation with well-known brands and transition to modern standards remains insufficient.

In the Andijan, Namangan, Fergana, Navoi, and Tashkent regions, fiber processing capacity exceeds local raw material output by 2–2.5 times. Despite this, regional governors continue to include yarn production projects in their regional investment programs, which drew criticism.

The importance of Uzbekistan’s diplomatic missions abroad actively assisting in the export of textile products was emphasized.

At the President’s instruction, the opinions of more than 200 entrepreneurs working in the textile industry were studied.

“I have fully familiarized myself with the problems that concern them. I will now announce the solutions. Starting today, in the textile industry we are declaring ‘One Hundred Critical Days’,” the head of state stated.

First, measures have been defined to financially rehabilitate certain enterprises whose situation has worsened, as well as to reduce production costs.

This year, clusters are allowed to extend the repayment term of their loan debts to five years, provided collateral is offered. Clusters that have pledged assets will only repay the principal amount.

Interest accrued in favor of the Agricultural Fund and banks will be collected only after full repayment of the principal. This will allow clusters to retain 800 billion soums in circulation annually. If clusters repay both principal and interest on time, half of the interest intended for the Fund will be returned to the entrepreneur.

In addition, a penalty of 377 billion soums accrued as of August 1 on loans issued to clusters for the 2022–2023 harvest will be canceled.

Measures will be developed to rehabilitate 144 enterprises with commercial loan obligations totaling US$2.2 billion. For enterprises whose operations can be stabilized, loan terms will be extended to seven years.

To ensure timely and loss-free cotton harvesting, farmers will be provided with a subsidy of 1 million soums per ton. If enterprises grow or purchase cotton using their own funds, they will be compensated for 10% of the cost of the raw material.

From now on, the social tax rate for all enterprises in the textile value chain will be set at 1%.

The requirement for a social registry will be abolished, and the mandatory share of textile products in sales will be reduced from 90% to 70%.

The Ministry of Economy and Finance has been instructed to propose extending this tax benefit to enterprises producing fiber, yarn, and fabrics.

Textile enterprises that organize a kindergarten for the children of their employees will receive a subsidy per child, similar to private kindergartens.

It was noted that all textile enterprises are concerned about electricity supply. In this regard, they will be allowed to connect solar panels installed for their own needs to the grid. Credit resources of US$200 million will be allocated for this purpose, with up to 10% of the loan interest rate subsidized.

“Here we are, providing a whole range of benefits to textile enterprises. But, as they say, applause can only be heard when both hands clap,” the President remarked.

At present, 15 clusters have no fiber processing capacity, and another 12 have insufficient capacity. It was stressed that such clusters must establish an effective cooperation system with spinning mills that are short of raw materials.

These clusters will not be required to attract additional investment or launch new fiber processing projects, and they will be offered attractive financial mechanisms. However, if a cluster within this framework does not start processing fiber, its status will be revoked next year, and preferential loans for the cotton harvest will no longer be issued.

President proposes initiatives to boost production and exports

Attention was drawn to the fact that yarn and fabric prices in Uzbekistan are on average 10–15% higher than those of the country’s main competitors. The reason is that domestic products are made of 90% cotton, whereas other producers use 30–40% cheaper synthetic materials such as polyester, viscose, and spandex.

Global demand for synthetic fibers and blended fabrics is increasing every year. Uzbekistan imports about 100,000 tons of blended yarn, fabrics, and textile materials annually.

In this regard, until January 1, 2028, blended fabrics and textile materials will be exempt from customs duties. Relevant agencies have been instructed to launch projects by the end of the year to produce at least 100,000 tons of blended fabrics.

In addition, if several dye manufacturers join forces to build wastewater treatment facilities, part of their expenses will be reimbursed from the funds of the Trade Development Company.

Last year, each of the 55 companies that exported products worth more than US$5 million provided jobs for at least 200 people. However, these enterprises are mostly located in regional centers and areas with developed industry.

If supported, these companies intend to open branches in remote districts where industry has yet to take root. For this purpose, the Trade Development Company will provide five-year loans of up to 10 billion soums at the Central Bank’s base rate. Salaries of foreign designers, technologists, constructors, and marketers will also be subsidized.

The condition is that the companies must create at least 200 jobs with decent wages. Responsible agencies have been tasked with using these incentives to commission 20 garment factories this year and another 30 next year.

The implementation of these measures will begin in Karakalpakstan.

The importance of expanding exports of finished garments to European and U.S. markets was emphasized, along with the need to strengthen standardization and digitalization efforts in the sector.

The Agency for Technical Regulation has been instructed to increase the number of enterprises holding international certificates to 300.

The Ministry of Foreign Affairs has been tasked with developing a “roadmap” for establishing cooperation with brands whose annual turnover exceeds US$1 billion and inviting these companies to a major exhibition to be held in Tashkent in September.

It was noted that the U.S. textile market is estimated at around US$100 billion annually, and with additional support measures, exports to this country could increase five- to six-fold.

Officials were instructed to open two trade houses — in St. Louis and New York.

The introduction of artificial intelligence into manufacturing processes will make it possible to increase revenues by 20–30%, ensure transparency, and reduce shadow economy factors.

In this regard, a program will be developed to implement ERP systems in textile enterprises, with part of the training costs for companies to be covered by the state.

It was emphasized that in the face of ongoing rapid changes in global trade rules and disruptions in logistics, special approaches are needed to develop the textile industry.

To this end, the President announced the establishment of the Agency for the Development of Light Industry. The Agency will oversee the textile, leather, and silk industries.

It will be headed by Nozimjon Kholmuradov, First Deputy Minister of Investments, Industry, and Trade.

A council of experienced entrepreneurs will be created under the Agency. A special fund of the Agency will be set up to provide state support and affordable working capital to textile enterprises. US$200 million will be allocated to form this fund.

The new Agency has been instructed, together with the council and entrepreneurs, to engage in dialogue, develop solutions to reduce production costs, increase production and exports, and, through the application of the “processing in the customs territory” regime, double exports of finished goods. It has also been tasked with strengthening cooperation and taking measures to rehabilitate enterprises operating at low capacity.

Together with international consultants, a program for the development of the textile industry until 2030 will be drawn up, along with proposals for the development of the leather, silk, and carpet industries.

“Hokims, clusters, and heads of textile enterprises must understand one thing: under current conditions, only those truly involved know how difficult it is to generate even 1 additional soum for the budget. If we translate into monetary terms the support measures announced today, their total comes to 7 trillion soums. Now, there must also be a corresponding return,” the head of state emphasized.

Instructions have been given to establish strict control over the implementation of the tasks set.

The meeting reviewed best practices of textile enterprises and heard reports from industry and regional leaders.