The European Union has decided to retain the GSP Plus status for Pakistan for another two years. Pakistan’s exports to the EU have grown 65 per cent since the grant of GSP Plus in 2014 to 2019. But the country could not take full advantage of the GSP Plus benefit, primarily due to the lack of a solid marketing plan to improve its exports. The value-added textile sector has been the main driver of the economy for the last 50 years in terms of foreign currency earnings and job creation. A zero-rating of sales tax is expected to help the sector fully exploit the GSP Plus facility.

There is a need to enhance product lines of the country’s exports. As of now the garment sector in Pakistan has a limited product line for the export market since the appropriate fabrics are in short supply. Since foreign buyers demand new garments based on G3, G4 and technical fabric materials, there is a need to offer more diversified products to take the benefit of GSP Plus. Another key challenge is the 17 per cent sales tax on exporters. About 45 per cent to 60 per cent of almost every exporter’s cash liquidity is blocked due to this taxation, a major hurdle in export growth.