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Poor taxing and surcharge policy hits Pak textile industry

Pakistan’s textile industry is hit by the government’s taxing structure and surcharge policy, making the industry environment uncompetitive for Pakistani textile manufacturers and traders.

A recent study by All Pakistan Textile Mills Association (APTMA) revealed the 5 per cent tax and surcharge are two major reasons for the industry being uncompetitive . On the other hand, the Indian counterparts enjoy a tax-holiday on textile products export and taxes in Bangladesh and China are close to one per cent only.

Quoting the World Trade Organisation, the study observed that from 2006 to 2014 the textile and apparel industry in Pakistan registered only 18 per cent growth while Bangladesh, China and India registered 175 per cent, 107 per cent and 96 per cent respectively in the same period. Energy tariff, under-utilization of power generation capacity and shortage of energy are cited as the other irritants for the growth of the industry in the study. Pakistan’s textile export rose to $13.8 billion in 2010-11 and maintained its momentum till 2013-14 but, it declined to $13.5 billion in 2014-15.

Meanwhile, the textiles ministry of Pakistan aims to double value-addition to $2 billion, which will enhance the annual exports to $26 during the next five years. In order to create eight million value chains the APTMA is targetting $20 billion worth of textile exports by 2018. To achieve this, the organization sought immediate withdrawal of surcharges on gas and electricity along with the reduction of corporate tax rate to 25 per cent and turnover tax to 0.5 per cent.