PTA blames government for neglecting leather sector

The leather sector exports of India, Bangladesh, China, have increased during this period, it said.

The PTA’s working paper asked the ministry of commerce to provide 50% subsidy to the sector for participation in the international fairs so that Pakistan’s second largest exporting sector can be promoted.

Pakistan’s leather sector exports have declined to $1.04 million in 2011-12 from $1.22 million in 2007-08, it said. The total world market has grown by $39 billion during this period, reaching $137 billion from $97 billion. Contrary to this, India has increased its share in the global market by more then $1.3 billion and fetching $4.86 billion market share from $3.55 billion share during this period.

China’s share has increased to $41.33 billion from $28.17 billion and Bangladesh is up at $765 million from $719 million. 

Explaining the reason of substantial growth in Indian market share in the world, PTA Chairman Agha Saiddain said that prudent policies give India an edge in the world markets.

The share of India in the global market of $137 billion is 3.6%, or $4.86 billion (2011-12). With an increase in the global market of leather and leather products from $98 billion to $137 billion, India has not only retained its market share but has been successful in increasing it, he said.

The market share of Pakistan has declined from 1% to 0.73%, which is alarming,” according to the working paper.

It explained the Indian strategy for promotion of its leather sector. India has a clear roadmap till 2026-27 to increase their leather exports from $4.86 billion to $38.5 billion by 2026-27.

The Indian leather development plans are being invested in technology upgrading, modernisation of their leather sector, establishment of footwear design and development centres, saddlery development, support for rural artisans, leather and footwear parks with infrastructure facilities like combined treatment plants and landfill sites, it said, adding that all the three ILDPs are available on the website and Pakistan can benefit from their research and future planning.

In Pakistan no leather development plan has been put together. The government hired a foreign consultant, which, according to the PTA’s opinion, is not required because local experts could develop a better strategy for the development of the leather sector, according to the paper.

The consultant J E Austin formed a strategy working group, comprising all the important players in the leather sector, including tanners, leather garment exporters, leather gloves, footwear makers where the leather sector strategy was layed-out.

The working paper revealed that the exports of leather sector were badly hit due to the impact of the war on terror and the energy crisis. Due to the poor law and order situation in the country and the war on terror, most of the countries have issued “no travel advice” to their respective citizens.

For this reason, no foreign buyers are visiting Pakistan and the leather sector has not been able to bring any foreign investor or joint ventures in to the country.

Major international retail chains such as Wal-Mart, GAP, Target Store, Levis, IKEA, etc, have either shifted their foreign staff to India or closed their office in Pakistan, according to the paper.

The PTA chairman said that the leather industry has contributed $5.18 billion in the export development surcharges (EDS) during the last five years, whereas the government has returned to the PTA just 14.4% of total export development surcharge contribution during the period.

The export development surcharge is supposed to be invested on export development and only 14.4% of the export development surcharge of leather sector is invested on development in the shape of subsidy on the international fairs. The government has effectively withdrawn this incentive by imposing a condition of three international participations, it added.

Source: The News International