Pakistan’s New Trade Package Cuts Duties on Textiles, Garments and Cotton

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Pakistan has new plans in place to boost trade for the country, and many of them involve cutting duties on goods for its largest grossing export sector.

As part of its new Trade Enhancement Initiative, Pakistan will invest 180 billion Pakistani rupees ($1.72 billion) to boost the country’s exports over the next five years.

“The package will strengthen the country’s economy as exports will increase,” Pakistan’s prime minister Nawaz Sharif said Tuesday, according to the Nation. “The package will help in ending poverty, illiteracy and backwardness and generating employment opportunities in the country.”

To strengthen those exports—namely in the textile sector—the trade package will see an 8 percent duty drawback on garments, 6 percent for home textiles/knitwear and 3 percent for yarn/greige fabric. Import duties for cotton, the customs duty on man-made fibers other than polyester and sales tax on textile machinery imports will also be eliminated.

The country’s commerce minister Khurram Dastgir told local media in a briefing that the scheme would continue for 18 months, from now through June 2018.

“There will be no condition on getting duty drawback in the first six months (January to June) under the scheme,” the Nation reported Dastgir as saying. “However, exporters will have to record 10 percent growth in exports during the next fiscal year 2017-18 as compared to the ongoing financial year.”

Pakistan has been in need of a pick-up for its garment sector as exports have been on a continuous decline, plagued by energy expenses that were high enough to force more than 70 mills to shutter. Last year, the country’s textile exports fell by $600 million.

The country has already allocated 110 billion rupees ($1.05 billion) toward an area of land it will use to complete a dam expected to generate 4,500 megawatts of so called “cheap” electricity, and 10,000 additional megawatts will be added to the national grid by 2018, Pakistan’s Associated Press said.

Railways are getting some attention too. So far, $8 billion has been designated for upgrading Pakistan Railways to increase the passenger and cargo capacity and cut down travel time.


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