The Minister of Trade, Tourism and Industry, Mr Daudi Migereko, said the policy would enable the textile industry in the region to flourish and reduce the exportation of cotton for local textile industries. .”We cannot go on importing worn cloths. .We need to regain our dignity and start wearing new cloths from textile industries in the region,” he said. .Migereko said he is closely working with his collegues like Mr Yahaya Kikwete, a Cabinet Minister in Tanzania and Kenyan officials to develop the policy. He was on October 21, launching a study on the opportunities and challenges in the cotton sector that was commissioned by two local NGOs; DENIVA and KADDE-NET. .The study was carried out in the cotton growing areas of Kasese by Dr. Nichodemus Rudaheranwa, of the Economic Policy Research Centre .Migereko said he recently received a letter from the United States of America, telling him to reduce the import tax on used clothes because they are the major exports of developed countries to underdeveloped nations. .He said he is working under strict instructions from President Yoweri Museveni, to revive all defunct textile industries as well as support the existing ones to improve their production capacity .Migereko said the government has decided to extend a grant of $5.5m to Phenix Logistics Limited, a local textile manufacturing company to enable it acquire more modern machines for better production. .He also said the government has released $2,000 to study the rejuvenation of Mulco textile industries in Jinja, adding that Lira Spinning Mill has been revamped and Pamba Textile mills will also soon be rehabilitated .Migereko said the government has introduced a pool of funds that will be used to lend money to Ugandans who are engaged in productive ventures .”I urge people who are in the textile sector to utilise this money to improve their ventures,” he said .He, however, noted that the government’s efforts to interest banks to lend to the private sector have not yielded much fruits because most banks lend to salary earners who end up buying second hand cars, refrigerators and other domestic appliances. This, he said, adds nothing to the treasury.Migereko urged the Cotton Development Organisation to help farmers acquire modern farming tools. “In Pakisatan, people survive on smallholdings but through cooperatives and associations, they are able to access tractors and fertilizers, which has made their country a great cotton producer,” he said .He advised that if local supply overwhelms local demand, actors in the sector should add value before exporting the cotton in order to earn better income.The Principle Commercial Officer Ministry of Trade, Mr Davies Bamuleseyo, said cotton farming must improve because under the AGOA arrangement, Tri-Star Apparels in Bugolobi will not be allowed to import cotton from Asia by 2008 .He said the AGOA terms dictate that cotton that will be used to manufacture clothes for the AGOA market should be grown in sub-Sahara countries only .Rudaheranwa, who carried out the study in Kasese, cited fluctuation of cotton prices and lack of access to modern farming tools as some of the causes of the declining cotton production in Kasese and other cotton producing areas in Uganda