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Carpet industry faces collapse.

Decrease in rebates and incentives, high mark-up rate and continuous harassment by the sales-tax officials have shrunken the target of carpet exports. Its exports are in a deficit of about $100 million or short of the fixed target of $240 million. The official target per month was fixed at $40 million whereas during the last two months (February and March), only 7.5 and $6.8 million worth of carpets were exported. If necessary measures are not taken the carpet industry will die out slowly.

According to the data compiled by the Export Promotion Bureau, during July to March 1992-93, the experts of carpets and rugs (woollen) amounted to $17,763 million as compared with $168.211 million during the same period last year, registering a substantial decline of 29.99 per cent.

According to the same data the carpet exports now ranks 12th among the foreign exchange earning commodities and its share has worked out to be 2.32 per cent in the country's exports. Its rank has dropped from the year's export figures to the 11th position with a share of 3.53 per cent. In an interview with the Chairman of the Pakistan Carpet Manufacturers and Exporters Association (PCMEA), Yaqoob H. Salehji said that during the current financial year 1992-93. India has exported carpet worth $1,000 crores, whereas our exporters could not even maintained their last year's figure of $227 million and would face a deficit of around $90 million.

The chairman said with the start of the new year (1993) the export figures are gradually going down and the industry has suffered a lot because of the wild allegation of employing bonded child labour, which was not "the true picture". He clarified that those children who were engaged in this industry, first of all worked not under any management, but under the supervision of their parents or elders, who themselves work in this industry.

Salehji emphasised that "question of bonded child labour does not arise as many of them worked in their houses with their parents not on a salary but contract basis with the manufacturers or the exporters". He said that if "we took a glance over the import of the last four years of the country they would show an increase of almost 400 per cent, whereas export figures are stagnant. If the dollar price has not shown an upward trend then the export would have remained in a down hill position.

He further said that the unit price of the carpets also showed a downward trend, that is $59 per square meter as compared with last year at $67. The quantity shipped during the period under review was 2.24 million square meters as against 2,91 square meters in 1991-92, a decline of nearly 23 per cent.

The chairman said that the imposition of the sales tax is one of the factor which is crippling the industry, although 99 percent of the goods are for exports. At present the production is at standstill and workers are quitting the handknotted profession. He cautioned that if no remedial measures were taken then Pakistani handknotted carpets would disappear from the international market. The chairman further said that the government was encouraging the exports of raw wool. "We are not against it, but the authorities should keep in mind the local requirement also. He said "only the surplus quantity of raw wool should be exported". Explaining his stand he said that if the state was exporting raw wool worth $100 and if the same quantity was used in the manufacturing of the carpet it would fetch about $800 and provide jobs to atleast 50 persons. Replying to a question about the planned training institutes for the carpet industry he said that the association has purchased lands in Lahore and Karachi.
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Title Annotation:Pakistan
Publication:Economic Review
Article Type:Industry Overview
Date:Apr 1, 1993
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