The tanning industry has urged the government to announce new incentive package for the leather industry to enable it to compete with the regional competitors to help enhance exports of leather goods and finished leather. According to Pakistan Tanners Association Chairman Gulzar Firoz, Pakistan leather export registered a decline of 20.93 percent during July-December 2015, against the regional countries who have shown tremendous increase up to 73.58 percent mainly on account of incentives provided by their governments.
China exports increased by 19 percent, India 63 percent while Bangladesh is on top of the list with 73.58 percent increase in the leather exports. The recession all over the world also negatively impacted the Pakistan's leather exports, he said and urged the government to take corrective measures by providing incentives which are required to have level playing field.
Pakistan is producing the finest quality of leather, as good as any European country and some of the best brands of shoes are buying leather from Pakistan, being shipped to China and Vietnam where the shoes are produced and re-exported to USA and European markets.
"Our global share in leather exports is negligible, thus the government must consider measures to increase the exports," he added. Gulzar Firoz said that like other value added exports 4 percent incentive which is being given to leather products in case of 10 percent increase, the same incentive on FOB (freight on board) value may be given on the export of finished leather.
The State Bank of Pakistan recently reduced the refinance rates for textile sector only from 3.5 percent to 3 percent which needs to be extended to the leather sector, he mentioned. He said that Customs duty three years ago on import of raw hides and skins was one percent, two years ago it was increased to two percent that was increased to three percent in last year budget. This three percent has increased the cost of raw material which is not refunded, he said and urged the government to abolish this three percent import duty and make this sector "Zero" rated industry as more than 80 percent of leather production is exported in the form of leather or leather products.
PTA chairman further said that duty drawback rebates for leather sector in Pakistan are much lower than neighbouring countries which is just 0.8 percent as compared with 5.8 percent in India, 7.50 percent in China, and 12.50 percent in Bangladesh. Our export of cow and buffalo hides for shoes in Pakistan is 1.17 percent against 5.8 percent in India, 7.50 percent in China and 12.50 percent in Bangladesh. On export of leather garments, the rates in Pakistan is 4.26 percent against 9.6 percent in India, 12.50 percent in China and Bangladesh each. On export of leather gloves the rates in Pakistan is 1.54 percent whereas in India the rate is 7.6 percent, in China 12.50 percent and in Bangladesh 12.50 percent. Similarly on export of footwear, the rates in Pakistan are 1.85 percent, in India 9.1 percent, in China and Bangladesh 12.50 percent.
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