LAHORE: After announcement by Pakistan’s government in the federal budget of granting zero-rating regime on sales tax to five export-oriented sectors, the Indian government has quickly approved Rs 60 billion special package for textiles and apparel sector to create 10 million new jobs in next three years, attracting investments of $11 billion and generating $30 billion in exports.
“The government, after a long delay, has finally announced a zero-rated regime for raw materials for five export-oriented sectors (except packing materials) and for all input components like coal, furnace oil, diesel, gas and electricity,” Pakistan Knitwear and Sweaters Exporters Association Chairman Shazad Azam Khan has observed.
He said that measures approved by the Indian government included additional incentives for duty drawback scheme for garments, flexibility in labour laws to increase productivity as well as tax and production incentives for job creation in garment manufacturing.
“Like Pakistan, apparel manufacturing has also shifted to countries like China from India over the last few years,” Khan said, and added, “However, China’s cost advantage has been neutralised to some extent because of increase in labour wages. India has advantages of economies of scale. Therefore, it was decided to take steps to give a boost to the sector.”
