The textile sector in Pakistan is battling with problems such as severe competition from neighbors, high cost of doing business, shortage of raw materials, high tariffs and delays in sales tax refunds.

During the first ten months of the current financial, the trade deficit rose by 40 percent compared to the corresponding period of the last financial year. Textile exports for the same period have fallen by one per cent from the corresponding period of last year.

Because of all this, the textile industry in Pakistan is running below capacity.

Pakistan’s textile sector contributes 60 per cent of the country’s foreign exchange earnings and provides more than 38 per cent employment in the manufacturing sector.

The industry wants tax free imports of cotton and polyester staple fiber since the country has suffered huge losses due to failure of cotton crop for the last two consecutive years. So it feels that imposing customs duty and sales tax on imports of cotton would be suicidal.

It also wants zero rating of all inputs including packaging materials, spare parts and fuel and energy and that the turnover tax be reduced to 0.25 per cent from the existing one per cent.

The industry has also asked for long term loans and working capital at competitive rates.