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Pakistan Leather Industry in a Lather Over Import Tariffs

The Pakistan leather industry wants relief from what it sees as excessive import duties on raw materials.

Ghazanfar Bilour, president of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has urged the government to remove various duties on the import of leather levied under various statutory rules and orders and quarantine requirements on import of raw hides and skins.

Bilou made the request after a delegation from Pakistan Tanners Association (PTA) recently apprised FPCCI of its problems. Led by PTA chairman Amanullah Aftab, the group of association and business leaders said that additional regulatory duty on import of various basic tanning chemicals and quarantine requirement imposed by the government are hampering the productivity of the leather sector which ultimately affecting the leather exports of the country.

He said that it’s the second largest export earning sector representing highly dynamic and value-added industry in leather and leather products besides being job oriented sector, according to the FPCCI. This sector would be further aided by government subsidies in lab testing, matching grants for setting up effluent treatment plants and slashing of duty drawback on export of finished leather goods.

In October, Pakistan’s Economic Coordination Committee (ECC) approved a proposal that 50 percent of the export package incentive for eligible textile and non-textile sectors be continued. Drawback is the refund of certain duties, internal revenue taxes and certain fees collected upon the importation of goods when they are then used for export.

[Read more about duty drawbacks: Pakistan and India Take Divergent Paths on Duty Drawbacks, but Prices to be Impacted]

A meeting of ECC of the cabinet chaired by Prime Minister Shahid Khaqan Abbasi also gave approval for a stipulation that the remaining 50 percent of the rate of incentive would be provided if the exporter achieves an increase of 10 percent or more in exports compared to the corresponding period of the last year.

It was also approved that an additional 2 percent drawback would be provided for export to non-traditional markets.

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At this week’s meeting, Bilou said rather than providing facilities to the tanning industries, the authorities are imposing duties and conditions which are creating problems for these industries.

Executives stressed that the government should take suitable measures to enhance the country’s and industry’s exports. He said that despite global recession and other domestic and international bottlenecks, the tanning industry is actively engaged in promoting its export-oriented business and has resulted in exports of leather and leather products are gradually increasing.

Additional regulatory duty on the import of various basic tanning chemicals and quarantine requirement are also hampering the productivity of the leather sector, Bilour added.