Pakistan Tanners Association (PTA), North Zone, has demanded of the government to announce a relief package for the leather industry to exploit its export potential of $2.5 billion.
The PTA North Zone Chairman Khurshid Alam told Business Recorder that local leather industry is facing strong competition in the international market and if the industry continues to confront the prevailing situation, its share in the world market could be diminished.
The leather sector's share in the foreign exchange earning has remained second largest because of high quality of our finished leather and leather products like, footwear, jackets, ladies' purses, suitcases and wallets. Presently, the Chinese, Indian and Bangladeshi products, being cheaper, are giving tough time to the Pakistani products internationally.
The input cost of leather made products in these countries is substantially low as compared to Pakistan. The leather industry in our regional competitors is enjoying huge incentives like duty draw back, special electricity tariff and cheaper loans.
According to the statistics made available with the association, China gives 7-11 percent rebate on the exports of finished leather of sheep, goat, cow and buffalo. Similarly, India and Bangladesh provide 7.5 percent and 15 percent rebate, respectively on the exports of same items whereas our government only gives 0.8 percent and 1.17 percent rebate, respectively, he said.
Besides finished leather, India, China and Bangladesh also give 11.4 percent, 5 percent and 15 percent respectively, rebate on the exports of leather garments against 2.38 percent of Pakistan. Pakistan gives only two percent duty draw back on leather footwear exports as compared to 11.4 percent, 11 percent and 15 percent of India, China and Bangladesh, he added.
"Our industry is also under pressure because of levies on the import of chemicals and other taxation at export stage. There is 1-percent withholding tax on all kinds of import including the chemicals, up to 20 percent regulatory duty on the import of chrome and formic acid in addition to export development surcharge, federal excise duty and charges on account of infrastructure cell at port", Khurshid said.
He said that the local leather industry could not compete the competitors mainly because of various kind of levies and insufficient duty draw back and demanded of the government to take necessary measures for the uplift of this vital sector, which in turn would give a boost to the exports.
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