Karachi: Leather sector exports are on the declining trend and the situation persisted the Indian competitors would snatch further market share of Pakistan’s leather and leather goods, warned Chairman Pakistan Tanners Association’s Standing Committee on Gas and Infrastructure, Usman Umer.
While criticizing government’s industry policies, he said that present government instead of offering incentives to the ailing industry unnecessarily over-burdening it by levying unethical and unpractical cess like Gas Infrastructure Development Cess (GIDC) due to which the future of exports-oriented industry is facing uncertainty.
Drawing government’s attention towards stagnation of exports in leather sector, Usman said that leather export have declined by more than 14 per cent during the last five years from $1.22 billion in fiscal year 2007-08 to $1 billion in 2012-13, mainly due to energy crisis and frequent load-shedding of electricity and gas shortage.
He explained in detail that leather processing is continuous process industry and electricity shut downs not only cause serious damage to leather in process but also have adverse effects on its quality. Due to this serious problem the leather sector is facing stagnation in its growth for last 5 years, he added. “The major reason for decline in growth of this second largest export sector was mainly due to energy crisis and now government’s decision to levy Rs150 mmbtu cess on gas.
He pointed out that India is capturing Pakistan’s share of leather exports as its exports picked up in May 2014 by 14 per cent. He said that India by virtue of many incentives including cheap gas, electricity and duty and taxes rebates has doubled its leather exports to over $28 billion in just few years.
While sending SOS to the government, he said that with the recent appreciation of Pak rupee the leather industry which exports almost its total production, is now finding it difficult to compete in global markets. He demanded that the exporters should be exempted from the levy of GIDC, in particular the leather industry which has potential to contribute far higher foreign exchange earnings which can bailout national economy from the current financial crisis.