Manufacturing Sector The sales tax rate on manufacturing was initially set at 12½ percent of value-added in the late 90s. Subsequently, it was raised to 15 percent. It now stands at 17 percent. Similarly, the share of dutiable imports of manufactured goods has been increased. Further, very high rates of excise duties have been applied on a number of goods like cigarettes. High Power Tariffs Industry has been placed at a competitive disadvantage due to the very high-power tariffs in Pakistan. Currently, the average tariff per kwh is equivalent to 16 cents. This compares with 6.7 cents in Sri Lanka, 7.4 cents in Indonesia, 7.7 cents in Vietnam, 10.2 cents in Turkey, 10.6 cents in Malaysia, 10.6 cents also in Bangladesh and 11.4 cents in India. More recently, a special concession has been made for five export industries, especially textiles, of a reduced tariff of 9 cents per kwh. 21.3. Reviving Industry There is a need for a strong set of reforms and major policies described below for industrial revival. This will enable realization of the target growth rate of 7 percent to 8 percent by 2024-25. Enhancing the Level of Effective Protection As highlighted above, Pakistan has moved too prematurely towards trade liberalization. A comparison with other countries confirms this finding. The average MFN tariff and the Trade Restrictive Index is given for a number of countries in Table 21.6. The latter includes the impact of non-tariff measures and trade agreements on imports. Therefore, there is a need for providing more tariff protection to industry. As indicated in the chapter on Agriculture there is need to change the tariff structure by raising the maximum tariff. As such, four slabs are recommended of 0 percent, 5 percent, 15 percent and 25 percent respectively. Table 21.6: The Average MFN Tariff and The Trade Restrictiveness Index* on Manufactured Goods of Selected Countries –(%) Average MFN Tariff Trade Restrictiveness Index Egypt 13.4 32.6 India 14.1 13.4 Malaysia 5.3 25.9 Bangladesh 13.4 16.8 Pakistan 11.9 7.5 *including the tariff equivalent of non-tariff measures and trade agreements Source: WTO, Tariff Profiles| World Bank 205