ISLAMABAD: The federal government has started a review of recommendations aimed at developing the cottage industry, including policymaking for small and medium enterprises (SMEs), an easy taxation system and establishment of an authority for the cottage industry.
On the other side, the Ministry of Finance has sought opinion of the Federal Board of Revenue (FBR) on the recommendations for waiving taxes and duties on the SME sector.
According to Muhammad Farooq, a cottage industry representative who wrote a letter outlining the recommendations, Pakistan does not have any policy or classification of various segments within the cottage industry.
“We have advised the government to pay attention to this sector as it can greatly contribute to GDP growth as well as assist in expansion of the tax net,” he said.
While SMEs require investments of millions, the cottage industry units operate with meagre investment of a few hundred thousand rupees and can be started as a small-scale business from home. In addition to promoting economic activities and employment, the cottage industry ensures provision of low-priced goods to the consumers, he added.
According to sources, the finance ministry has forwarded the three-page letter to the FBR through Adviser to PM on Finance Dr Abdul Hafeez Shaikh. After its review, the FBR may finalise tax and duty exemptions for the SME sector and cottage industry.
As per the letter, the cottage industry is engaged in scores of businesses including food items, moulding products and handicrafts. The industry creates a large number of employment opportunities with very little investment while the income generated from it is spent locally due to which business and economic activities get a further boost.
According to the letter, India is immensely gaining from the cottage industry as its government has given technical and financial assistance to small businesses as part of its policy.
Published in The Express Tribune, October 22nd, 2019.