Ministry of Textile has informed the National Assembly that the levy of turnover tax on exports is one of the major reasons for decrease in overall exports of the textile industry. In a written reply to Minister of Textile and Industry, Rana Muhammad Farooq Saeed Khan admitted that the exports of textile products have decreased during last one year.

The major reason was decline in global demand as global trade has declined by 9% and Pakistan is also facing the same challenges and global slow-down. Globally, the textile trade is also passing through a process of readjustment after quota phase out and the textile industry in Pakistan is adversely affected by the severe competition faced, thereof. The cost factors viz gas, power, labour and financial cost have increased substantially in last couple of years which have increased the cost of production of textile products. The textile industry is unable to pass on this increase to its buyers due to the tough competition on one hand and price war on the other. Besides increase in financial cost, the exports are subject to 1% turnover tax and 0.25% export development surcharge on sales. In addition, there is a big impact of labour levies which in current situation are impacting the industry, when it is facing global slow-down.