Lahore-Pakistan Footwear Manufacturing association has always work towards betterment and sustainability of Footwear sector of Pakistan. Their aim is to increase dependency on indigenous productions of Footwear products and decrease reliance on Imported products to help Government save valuable foreign exchange and build export-oriented Industry for Pakistan. Under this objective, PFMA Chairman has taken this responsibility to proposed to the Government to undertake vital policy reforms in coming Fiscal budget 2020-2021. These steps play vital role in survivability of the Footwear industry of Pakistan as it going through transformational phase which required immediate Government attention to introduce concessional policies to help industry sustain its status under current competitive business environment.

PFMA proposal covering all key areas important for the survival of the Footwear industry and are mostly overlook by policy maker while preparing fiscal budget. Some of the most urgent recommendation key points are as follow:

Extension of Scheme – Local Taxes and Levies Drawback

Incentive of Local Taxes and Levies Drawback notified vide SRO 711(1)/2018 dated 08 June 2018 be extended for another term of 3 years (July 2021 to June 2024) and be enhanced to 4%, to enable us to position in the international market.

Raw Materials

Economy is increasingly driven by import-based consumption. Investment in industry is much less than our neighboring countries. The only sustainable solution is waiving off ACD and RD on all raw materials for footwear industry and put them in lowest slab of custom duty, to promote “Made in Pakistan Policy”.

Fixed Duty Proposal

Import duties on ready shoes must be fixed in dollar terms irrespective of FOB price. This shall definitely stop under-invoicing. Another positive impact would be on low priced imported shoes, which will be on real value (expensive) resulting in gearing-up of local manufacturers.  Under invoicing to be discouraged through further uniformity in ITP value.  It will give a level playing field to local products(vis-à-vis) the imported productsCustom duty on shoes must be fixed in dollar terms irrespective of FOB Price as detailed below.

Men shoes @ US$ 5.00 per pair. (in equivalent Pak Rupees)

Ladies Shoes @ US$ 4.00 per pair (in equivalent Pak Rupees)

Children Shoes@ US$ 3.00 per pair (in equivalent Pak Rupees)

This will eliminate under invoicing completely. Another positive impact would be that it will give opportunity to the local manufacturers to manufacture shoes locally and substitute the import.

As for the international Branded shoes, their ITP value may be determined by Custom Authorities as per rules and regulations and custom duty and other taxes are applied at existing rates. It is also suggested to review ITP Valuation Ruling on half yearly basis to manage the pricing in true sense.

Zero Duty System to Promote “Made in Pakistan” Vision

Zero – Duty System must be implemented in order to promote ‘Made in Pakistan’ Vision.  All machinery and software related to Footwear Industry must be exempted from duties under the vision ‘Made in Pakistan’. Exemption from all taxes on income for enterprises commencing commercial production by the June 30, 2020, in all industrial estates should also be allowed for the next ten years.It is proposed that restoration of Tax credit under section 65D for newly established industrial undertakings for a further period of 5 years.

These Policy reforms will help Footwear Industry to overcome challenges vital for their survival and sustainability.