Rs15bn for REAP: MoC ‘favour’ sparks export sector backlash
- The decision also includes an increase in the overall EDF budget to Rs27.3 billion
ISLAMABAD: The Commerce Ministry’s abrupt decision to extend financial support of Rs15 billion from the Export Development Fund (EDF) to rice exporters for three months to offset their losses has triggered strong opposition from other export-oriented sectors.
In this regard, the Pakistan Readymade Garments Manufacturers & Exporters Association (PRGMEA), representing the value-added apparel sector, has approached Prime Minister Shehbaz Sharif, conveying serious concerns within the export community following the EDF Board’s approval of Rs15 billion in financial support for the rice sector — 3 percent for non-basmati and 9 percent for basmati on FOB value — up to June 30, 2026.
READ MORE: Industries hit back at decision to extend over Rs15bn to rice exporters
The decision also includes an increase in the overall EDF budget to Rs27.3 billion.
“This sector-specific support has raised grave concerns among major exporting sectors, particularly apparel and textiles, regarding equitable access to competitiveness support,” said Ijaz Khokhar, Convener and former Chairman of PRGMEA, in a letter to the prime minister.
The issue was also raised with Defence Minister Khawaja Asif during his visit to the Sialkot Chamber of Commerce and Industry on Friday.
“We firmly submit that export-led growth cannot be achieved through selective support. The value-added apparel and textile sector contributes around 55–56 percent of Pakistan’s total exports, generates the highest foreign exchange earnings, and provides the largest employment base. Yet it continues to face unprecedented manufacturing costs, liquidity pressures, and policy uncertainty, placing its global competitiveness at serious risk,” Khokhar added.
According to the value-added apparel sector, extending competitiveness support to a single sector while Pakistan’s largest export-earning and employment-generating sector remains unsupported has caused serious concern, particularly among apparel SMEs. Such an approach, it argued, undermines the principle of equitable treatment and weakens the country’s overall export base.
PRGMEA also pointed out that the Duty Drawback on Local Taxes and Levies (DLTL) is a federal policy instrument historically provided through budgetary export packages and does not fall within the mandate of the EDF. It further maintained that EDF funds, contributed by exporters themselves, should not be utilised without due consultation and approval of the contributing sector associations.
The association placed on record its serious concerns regarding the 91st meeting of the EDF Board of Administrators held on January 19, 2026, where an agenda titled “Rice Exporters’ Competitiveness in Global Markets” was tabled without a working paper and allegedly in violation of Section 8 of the EDF Act. Despite prior objections from exporting associations, the agenda was neither deferred nor withdrawn.
Repeated changes to the meeting time on the same day and the inclusion of a proposal seeking DLTL support through EDF, PRGMEA said, raised significant procedural and governance concerns.
“Routing a federal policy instrument through EDF without due process sets an undesirable precedent and undermines exporter confidence,” Khokhar said.
PRGMEA appreciated the prime minister’s directive of November 26, 2025 regarding the abolition of the Export Development Surcharge (EDS) and the government’s assurance to provide alternative funding for the EDF. In the same spirit, the association urged that competitiveness support be extended equally to all exporting sectors, with particular focus on the apparel and textile sector, which remains the backbone of Pakistan’s export economy.
“At a time when exporters are facing mounting pressures from the EU Green Deal, due diligence requirements under GSP Plus, and emerging global trade barriers—with 2027 fast approaching—immediate and fair policy support is essential,” Khokhar added.
After outlining its concerns, PRGMEA submitted the following proposals to the prime minister: (i) ensure equal access to competitiveness support for all exporting sectors, particularly apparel and textiles; (ii) ensure EDF funds are not utilised without due consultation and approval of contributing exporter associations; (iii) approve immediate corrective measures, including continuation of DLTL and restoration of regionally competitive energy tariffs for the value-added export sector; and (iv) convene an urgent meeting of all exporting sector associations to develop a unified, transparent, and equitable export facilitation framework. “We firmly believe that a balanced and non-discriminatory approach will strengthen Pakistan’s export performance, protect employment, and safeguard national economic interests,” he said.
Talking to Business Recorder, Fawad Ijaz Khan of PLEGMEA termed the move unfair, saying it was unjustified to extend special financial support to one sector when all export-oriented sectors were facing losses.
He urged the government to treat all sectors on an equal footing to help exporters cope with the prevailing challenges.
Copyright Business Recorder, 2026
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