LAHROE - The leather sector is facing stagnation and its exports have declined by more than 14 per cent during the last five years from $1.22 billion in fiscal year 2007-08 to $1 billion in 2012-13, mainly due to energy crisis and frequent loadshedding of electricity and gas.
Requesting for uninterrupted electricity supply to continuous process industry of leather tanning to Khawaja Muhammad Asif, Federal Minister Water & Power, the PTA central chairman Agha Saiddain in a letter, has observed that growth rate of leather sector exports was in minus and exports reduced to 14 per cent as against positive growth in the region with 47 per cent, 40 per cent, and 102 per cent in China, India and Bangladesh, respectively during last five years.
Referring his various representations and personal meetings with the Minister of Power of previous government, he explained in detail that leather processing is continuous process industry and electricity shut downs not only cause serious damage to leather in process but also have adverse effects on its quality.
Due to this serious problem the leather sector is facing stagnation in its growth for last 5 years, he added.
“The major reason for decline in growth of this second largest export sector was mainly due to energy crisis and frequent load shedding of electricity and gas.
He requested to exempt leather tanning sector from loadshedding, as leather processing is a continuous process industry and sudden and lengthy electricity shut downs cause serious damage to the quality of leather resulting into financial loss to the tanning units.
Due to frequent shut-downs the quality is badly affected which results into customer claims and bad image for the country. Leather Sector is providing jobs to more than one million people directly and indirectly and specially to weaker sections of our society. For this very reason Indian government injected Rs25710 million for uplift of this sector under ILDP (Indian Leather Development Plans). The sector has potential to grow three times if bottlenecks in shape of load shedding and others are removed.
PTA has been requesting time and again the government for ‘priority status’ of the sector but except announcement of Leather Export Promotion Council there is not a single practical step towards uplift of the sector.
Contrary to this, the government has withdrawn facility of subsidy on participation in international fairs. The subsidy amount was paid from the sector’s own funds collected under the head of Export Development Fund at the rate of 0.25 percent from each export consignment.
He said that the tanneries in Pakistan are capable of producing world class leather if this sector is patronized by the government by providing uninterrupted electricity and gas supply.
He said that the percentage component of energy cost per unit of leather is much lower than in textile, spinning, and weaving. Similarly the gas requirements are also not very big.
With little attention the government can raise exports of leather sector from present $ 1.04 billion to $ 3 billion in next 2/3 years, he claimed.
Presently 95% of tanned leather is exported in finished form and in the form of leather products such as garment, gloves, footwear, and leather goods. For this reason also the tanning sector may be exempted from load shedding.