Asks govt to encourage farming and breeding of animals for raw material. PHOTO: AFP
It was a long-standing demand of the industry considering that the country imports a huge quantity of raw hides - a necessary raw material for different leather products.
Pakistan Tanners Association Chairman Anjum Zafar said that the industry faces acute shortage of hides in the country due to excessive slaughtering and lack of breeding and farming to raise livestock.
Zafar said that all major demands of the industry have been accepted by the government in the federal budget 2017-18.
“This step by the government will help a lot in reviving the dying leather industry and compensate for the lost production capacities for export,” according to a press release.
However, he requested the government to encourage farming and breeding of animals on an urgent basis so that the industry gets enough raw materials from domestic resources.
The government has also removed duty on stamping foils, a new technology in leather tanning industry to produce high-quality fashion leather articles. The industry believes it would help gain additional share in the international export market and compete with other countries’ manufacturers.
Zafar hoped that the government would meet its new commitments and release all pending sales tax refund claims of the industry before August 14, 2017. This would facilitate leather exporters who were facing liquidity shortages, he added.
The leather industry is one of those five export-oriented industries that will continue to enjoy zero-rating facility in the upcoming fiscal year because the government has decided to continue tax incentives for these sectors in the budget.
The association chairman has requested the government that the minimum turnover tax of 1.25% announced in the budget should not be levied on the export sector under the final tax regime, which is 1% at present. He said this tax is already much higher than normal taxation and export sector is already under a lot of pressure due to high cost of doing business.
Zafar also requested to allow exemption from duties on import of tanning machinery as has already been allowed/exempted for textile and poultry sectors, adding that the leather sector was in dire need of upgrading machinery to produce innovative fashion leather products.
The federal government announced an export package of Rs180 billion in January 2017 for five export-oriented sectors for a period of 18 months to support the declining exports.
Leather industry exports have declined for the past two years, but officials expect the industry will recover losses in the ongoing fiscal year 2016-17.
Overall, leather exports in Pakistan declined to $977 million in 2015-16, down 18.27% from $1.19 billion in 2014-15, according to the Pakistan Tanners Association. In 2014-15, leather exports had already declined by 6.4% compared with 2013-14.
Published in The Express Tribune, May 28th, 2017.
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