Carpet industry growth counts on zero-rating

The carpet sector cannot benefit from the duty-free access to EU market under Generalized System of preferences unless the government restores zero-rated regime for export-oriented carpet industry to help ease its liquidity flow. A significant ratio of working capital of carpet exporters is already stuck-up in refund regime at a time when the carpet export has already declined to $120 millions from US$ 300 millions.

Pakistan Carpet Manufacturers & Exporters Association (PCMEA) chairman Major (r) Akhtar Nazir Khan Cooki and vice chairman (NZ) Kamran Razi, raising the demand of zero rating in a statement, said the government should bring in necessary reforms and give special status to export-oriented carpet industry allowing zero-rating facility to achieve desired goal from GSP Plus scheme. Being mainstay of the economy and major stakeholder in forex earnings, export-oriented carpet sector should be given special status, they demanded.

“If the government wants to fully utilize the GSP Plus scheme, it should immediately enforce the previous system of zero-rating for export-oriented carpet industry which would mean no deduction and no payment of sales tax refund to help ensure cash flow for industry to meet export contracts. After the elimination of zero-rating, sales tax refund of up to February 2013 by the FBR is still pending. Hence a huge amount of carpet exporters have stuck-up in sales tax refund regime creating severe financial crunch.”