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Pakistani leather goods exports fall by 30%
Jun '10
Where Pakistan noted a 30 percent fall in the leather goods exports during July-May 2009-10, India during the same period, depicted a growth of 30 percent.

The Pakistani government, should therefore, consider fixing the value-added tax (VAT) for leather industry at zero percent, just like it has been done for the general tax. The leather exports of country for the corresponding period in 2008-09 was recorded at $1.20 billion.

Experts opined that, owing to higher production cost, the country's leather exports are being eaten up by its close competitors, thereby, nearing the end of the industry.

If at this point of time, VAT is imposed on leather sector, then the exports would lead to a further fall of 25 percent, owing to heavy taxes on raw materials and higher cost of production.

The country by exporting leather and leather products during July-May 2010 had barely managed to earn $800 million. With the imposition of VAT, it would lead to a loss of more $150 million.

The authorities by pioneering such a direction have additionally burdened the export sector, and this is believed to negatively affect the sector, which is of national significance.

The export sector, all around the world is exempted from the purview of taxation and no such notion of minimum tax system prevails in any of the countries. Even the legal manuscripts, do not mention anything with respect to such innovative concept.

Even now, the state government has not initiated any measures to provide any advantages to the leather sector. On other part, the Indian government has initiated timely measures for its leather sector, for instance, it declared a relief package of INR 4,000 million in its 10th leather plan and INR 9,130 million in its 11th leather plan, thus facilitating the leather exporters of the country to hike the exports by 28 percent.

An industry insider also stated that, a grant of Rs 2,560 million under the head of modernisation, capacity building and betterment of infrastructure of the sector has also been further provided to the Indian exporters by their government.

On the contrary, the Pakistani government ignored the recommendations of the leather industry, leading to adverse effects on the cost of running such a business. Demands made earlier by the industry people were repeated again recently, with respect to, the State Bank of Pakistan and other government bodies granting foreign exchange bookings in lieu of imports.

The main competition for Pakistan comes from countries like Turkey and Bangladesh and the authorities should take into consideration the hardcore reality.

Fibre2Fashion News Desk - India

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