Karachi — The Pakistan Tanners’ Association (PTA) has issued a grave warning about the dire state of the country’s leather industry. Muhammad Mehr Ali, Chairman of the PTA, highlighted the escalating crisis that threatens to shut down operations across the sector. He emphasized the urgent need for government action to address critical issues that are pushing this vital export-oriented industry to the brink of collapse.

In the latest Federal Budget for 2024-25, the government has imposed additional taxes on the leather industry, exacerbating an already heavy burden of duties and tariffs. The industry, which significantly contributes to Pakistan’s GDP, is struggling to remain viable amid these new financial pressures.

Details of New Duties:

• 2% Additional Customs Duty (ACD): Imposed on HS Codes including 4107.1200, 4104.1100, 4107.9200, 4106.2100, 4106.2200, 4112.0000, 4113.1000, 4104.1900, 4105.2000, 2830.1010, etc.
• 5% Regulatory Duty (RD): Applied on HS Code 3909.5000.

These new duties are pushing the industry out of the competitive international market, making it increasingly difficult to secure export orders for finished leather.

A severe shortage of financial capital is another critical issue plaguing the industry. The government owes approximately Rs2.5 billion (approxi US$9 Million) to the sector in unpaid sales tax, duty drawback claims, income tax, and deferred claims. This financial instability has already forced some units to shut down, with many others on the verge of closure due to their inability to sustain operations.

Chairman Muhammad Mehr Ali has called on the government to take immediate action to resolve these issues. He stressed that without intervention, the industry, which plays a significant role in the country’s economic growth, will continue to deteriorate, leading to widespread closures and loss of export revenue.

In conclusion, the Pakistan leather industry is at a critical juncture. The government’s recent tax impositions and failure to address financial claims have created an unsustainable environment for the sector. Urgent intervention is needed to prevent the complete collapse of this key industry and to support the economic stability of the nation.