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Pakistan scraps VAT to boost textile and apparel export

Pakistan will do away with the value added tax (VAT) for textiles. Pakistani readymade garment exports are currently gaining momentum in the international market. Hence the move to abolish VAT is expected to support this development further. In addition there will be a reduction of the power tariff.

A reduction of VAT on textiles from 15 per cent to zero should give Pakistan a competitive edge over other readymade garment-producing countries; in comparison, VAT on textiles is 15 per cent in Bangladesh, 12.5 per cent in India, 10 per cent in Cambodia and 17 per cent in China.

The textile and garment industry is Pakistan’s largest manufacturing industry and, after agriculture, employs the second largest number of skilled and unskilled workers, about 15 million people or roughly 30 per cent of Pakistan's overall workforce. In Asia, the country is the eighth largest exporter of textiles and garments.

Textile Asia was held in Pakistan, March 9 to 11, 2016. It attracted participants from more than 45 countries, among them Austria, China, Czech Republic, France, Germany, India, Italy, Korea, Taiwan, Turkey, UK and USA. The fair’s focus was on textiles, garments, embroidery, digital printing machinery and chemical and allied services.