ISLAMABAD, July 27: Pakistan's cutlery industry is on the verge of closure due to the lack of technological development in the sector and tough competition from China.

Outdated technology, inferior quality, poor raw materials and high production cost were among the main reasons, which curtailed the growth of the cutlery sector.

These were the findings of a case study on cutlery sector conducted by Qasim Qureshi, which was presented here at a seminar on trade, development and poverty reduction.

According to the study the business transactions in the industry were small and of medium scale thus it has not benefited from the mass production. The province of Punjab houses about 65 per cent of the total number of small industrial units--280,000--in the country.

The report pointed out that massive reduction in customs duty on import of cutlery items during the last few years had severely affected the local production. This unilateral reduction in customs duty has encouraged imports of cutlery products from China because of the government’s ill-conceived policies.

The customs duty on cutlery items ranged from 35 per cent to 65 per cent in 1995-96. These duties were reduced to a range of 5 to 25 per cent by 2003-04 with most items in the 25 per cent category.

Similarly, customs duty on imports of many items such as knives, letter openers, erasing knives, kitchen chopper, cleaver and mincing knives has been reduced to 20 per cent in 2005-06. While similar reductions were made in customs duty on import of stainless steel cutlery, which encouraged the import of Chinese products in the local market.

The study recommended that the government must improve workers’ productivity skills through education, on job training, skill upgradation and dissemination of knowledge of new and latest techniques. This would translate into higher value addition and low labour cost.

The exporters need to invest in this area, the study suggested adding that there were many small companies in this business segment and the government must ensure training of all stakeholders in the sector including exporters.

It was recommended that measures should be taken to improve physical and financial infrastructure including shipment, customs clearance, cargo space, and handling at the ports and airports. Reliable and low cost supplies of power, water, gas, telecommunication etc should be assured for the export-oriented industries.