PFMA opposes proposal to place footwear sector under 3rd Schedule

LAHORE, (APP - UrduPoint / Pakistan Point News - 17th Jun, 2026) The Pakistan Footwear Manufacturers Association (PFMA) Wednesday expressed concern over the proposal in the Finance Bill 2026 to place footwear sector under Third Schedule, arguing that it may create difficulties for the industry, discourage documentation efforts, and place additional pressure on one of Pakistan’s most labour-intensive manufacturing sectors.

Addressing a press conference here at Lahore Chamber of Commerce and Industry (LCCI), LCCI President Faheemur Rehman Saigol said that placing the sector under Third schedule would have serious negative consequences, citing, “Footwear is an extremely important sector, and its input in the economy is very high. Including it in the Third Schedule will have negative effects.” Chairman PFMA Rashad Islam, former Chairman Mansoor Ahsan Sheikh, and Executive Committee Member Ahmed Hussain were also present.

LCCI President said that stakeholders should be taken into confidence during the policy formulation process. This move would discourage the documented businesses, he said and urged the government to immediately reconsider the proposal. “This sector should be immediately removed from the Third Schedule. Moving it from the normal tax regime to the Third Schedule will reduce the tax net instead of expanding it,” he added.

PFMA representatives said that the footwear industry fully supports documentation, taxation, and national revenue objectives, but emphasized that taxation policy must remain practical, rational, and aligned with industrial realities. PFMA Chairman Rashad islam said the sector is not demanding exemptions but a fair and workable system that does not undermine compliant businesses. “The footwear industry supports documentation and national revenue generation. However, placing the sector under the Third Schedule may unintentionally push business back towards the undocumented economy instead of expanding the tax base,” he said.

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He added that documented manufacturers and retailers are already paying taxes, investing in production facilities, maintaining retail infrastructure, and generating employment. Any additional burden, he said, could shift consumers towards undocumented channels, increasing informality and tax leakage.

Highlighting employment concerns, he said the industry directly and indirectly supports thousands of workers across the value chain including suppliers, retailers, transporters, packaging units, and raw material vendors. He explained that Third Schedule is designed for sectors where manufacturers control final retail pricing, whereas the footwear industry operates differently. “In our sector, manufacturers produce for retailers and brand owners, while retail prices are set at the retail level. The same product can be sold at different prices in different outlets. Applying a retail-price-based taxation mechanism will create distortions,” he said.

PFMA also noted that leading footwear-producing countries such as Vietnam, Bangladesh, India, and Turkey generally rely on actual transaction value taxation rather than artificial retail pricing mechanisms, urging Pakistan to align with international best practices. The association reiterated its readiness to cooperate with the government in strengthening POS integration, digital traceability, and documentation, but stressed that focus should remain on bringing the undocumented sector into the tax net rather than burdening compliant businesses.

PFMA Chairman Rashad Islam also cautioned that nearly 75 per cent of the sector remains undocumented, making it difficult for compliant businesses to compete under increased regulatory pressure. The Association urged the Federal government to reconsider the proposal in consultation with stakeholders.