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Problems of leather industry

Problems of leather industry

According to a senior official of the Pakistan Tannery Association, at least 95 percent entrepreneurs will not be able to avail benefit of the incentives announced by Prime Minister Nawaz Sharif in the export package. The government has so far failed to provide infrastructure to protect and process hides and scientifically dispose of the effluents to protect environment. The tannery industry is already in trouble and last year it suffered a loss of Rs 1.5 billion as hides of sacrificial animals could not be protected from excessive heat and were damaged. The experts believe the country has potential to earn more than $3 billion annually if tannery industry is developed on modern lines and the government works out a preferential status for it. There are over 450 leather garments manufacturing units in the country which produce millions of pieces annually. The leather industry’s current capacity revolves around producing 100 million pairs of footwear annually against a production capacity of 200 million pairs. The leather sector is one of the leading job providing and earning sectors in the country. At least 800 tanneries and half a million people are engaged with it.

According to the official, the current exports of leather products stand at $195 million as compared to the corresponding period of the year 2015-16 in which it earned $211 million, and is showing a decline of around 7.5 percent. The overall leather exports have declined by 26 percent which means the country has lost a quarter of its exports in one year. The experts believe the cost of doing business is rising and the industry is unable to compete with the other countries in the region in the international market. The Rs 180 billion export package announced by the prime minister is a welcome step, but too late and is regarded as ineffective as all the major relevant HS codes have been missed in SRO 62 (1)/2017issued on February 2 2017. A month as passed but the ministry of commerce has failed to rectify it despite reminders by the stakeholders.

There is no doubt in the good intentions of the government as the export package has been announced for the benefit of the exporters and not for political reasons. However, apart from announcing the package, the government should also release export rebates as well as sales tax refund claims in time to keep the wheel of industry in running mode. The Pakistani entrepreneurs are also need to introduce their own fashion brands to ensure their presence in the international market.