Lahore - The carpet industry, which is trying to cope with increasing cost of production because of high electricity tariff and stuck-up sales tax refunds, has demanded the government of 10 percent compensation rebate for carpets, exported during last six months, as the sudden drop in US dollar’s value against rupee has turned all carpet export businesses in red.

The Pakistan Carpet Manufacturers & Exporters Association (PCMEA) chairman Major (r) Akhtar Nazir Khan Cooki and vice chairman (NZ) Kamran Razi said that payments expected to be realized at Rs. 108 were received at 10 percent less value as against thin margin of profit which ranges from one to 2.5 percent due to energy crises and higher cost of doing business.

They said that carpet industry is not interested in devaluation of the local currency at all but simultaneously we want the government to maintain exchange rate which should not be so humpy and fluctuating that was seen in last few days.

In a letter written to the Ministry of Commerce, the PCMEA leaders observed that the exports of carpets have already declined from $.350 million to $.100 million as a result of slow down and recession in EU and US markets.

Major Cooki said that carpet is a luxury item traditionally sold on long term credit of six to nine months. This fact has been acknowledged by the State Bank of Pakistan too by allowing export finance for up to 270 days.

He said that the export orders were agreed about six months ago at the exchange rate of $=Rs108 and now at the time of realization of export proceeds the exchange rate has dropped to around Rs.98/- per dollar. This is causing loss of 10% to the carpet exporters, who are already in crisis.

The PCMEA Vice Chairman Kamran Razi said that benefit of decline in dollar value has not been passed on to the industry, as the prices of all imported items including petroleum products, which are directly linked to the dollar exchange rate, have not dropped comparatively.

He said the value of greenback had dropped by around 10 per cent and if the govt was sincere to reduce cost of doing business, it could easily reduce rates of petroleum products as well as power tariff by 10 per cent.

Kamran Razi said that carpet industry appreciates government measures for historical rupee appreciation but it was also the fact that the sudden rupee appreciation coincided with the energy crisis have squeezed industry’s liquidity for running operations severely, leading to the loss of foreign exchange and revenue of national exchequer.