Ministry of Textile has informed the National Assembly that the levy of turnover tax on exports is one of the major reasons for decrease in overall exports of the textile industry. In a written reply on Thursday, Minister of Textile and Industry Rana Muhammad Farooq Saeed Khan admitted that the exports of textile products have decreased during last one year.

The major reasons for decline in exports included that there was major decline in global demand and all leading exporting countries have suffered as their exports have experienced significant decline. The global trade has declined by 9 percent. Pakistan is also facing the same challenges and global slow-down, he added.

Globally, the textile trade is also passing through a process of readjustment after quota phase out and the textile industry in Pakistan is adversely affected by the severe competition faced, thereof. Pakistan's competitors are posing tough challenge by virtue of their competitiveness. They are subsidising exports and thus securing larger market share, it added.

The cost factors viz gas, power, labour and financial cost have increased substantially in last couple of years which have increased the cost of production of textile products. The textile industry is unable to pass on this increase to its buyers due to the tough competition on one hand and price war on the other. Law and order situation in last couple of years had negatively affected the industry.

Besides increase in financial cost, the exports are subject to 1.00 percent turnover tax and 0.25 percent export development surcharge on sales. In addition, there is a big impact of labour levies which in current situation arc impacting the industry, when it is facing global slow-down.

The reply said that Ministry of Textile Industry has taken many initiatives/steps for the promotion of textile industry which are as following: The payment of outstanding claims of RandD Support and interest rate subsidy to spinning sector and its extension for one year. Furthermore, continuation of LTEF scheme by State Bank of Pakistan (SBP). The initiation and continuation of Stitching Machine Operator Training (SMOT) Scheme and establishment of Garment Cities in Karachi, Lahore and Faisalabad and Textile City at Karachi.

Source: Business Recorder