PCMEA’s proposals for 2025-26 budget: Govt urged to address challenges faced by carpet industry

LAHORE: The Pakistan Carpet Manufacturers and Exporters Association (PCMEA) has submitted a set of proposals and demands for the federal budget for the fiscal

year 2025-26 urging the government to address key challenges faced by the industry.

The association has called for a reduction in heavy duties taxes and restrictive measures which they claim are hindering the growth of handwoven carpet exports and putting Pakistan at a competitive disadvantage against global rivals like India.

PCMEA Patron in Chief Abdul Latif Malik Chairman Mian Atiq ur Rehman and Vice Chairman Riaz Ahmed emphasised that Pakistan’s handwoven carpet industry is one of the largest cottage industries in the country. Being 100% export oriented it plays a crucial role in the national economy by generating valuable foreign exchange. The industry relies on raw materials being sent to Afghanistan for partial processing before returning to Pakistan for final value addition and export.

However, under Schedule 5 of the Customs Act 1990 a 25% sales tax on partially processed raw materials entering through the Torkham border has placed a severe financial strain on exporters disrupting cash flow and working capital. The association has proposed reducing this tax to a non-refundable 5% to ease financial pressure support exporters and improve trade facilitation. They argued that this measure would not only stabilise the industry but also help Pakistan to maintain its competitive standing in the global market. Additionally, the association has expressed serious concerns over Circular EF02 (2023) issued by the State Bank of Pakistan which imposes penalties on delayed export earnings.The directive enforces a 3% penalty for delays of up to 30 days 6% for delays of 31 to 60 days and a substantial 9% for payments delayed beyond 60 days.