KARACHI: All Pakistan Textile Mills Association (APTMA) has urged the government to immediately remove yarn and fabric from the Export Facilitation Scheme (EFS), warning that their continued inclusion is jeopardising the domestic textile industry and distorting fair market competition.
Addressing a press conference at APTMA House here on Tuesday, Kamran Arshad Chairman APTMA said that inclusion of Yarn and Fabric in the EFS has resulted in unfair market competition as the domestic industry products are paying 18 percent GST, while importers are enjoying tax-free and duty-free regime.
He said that Pakistan Cotton Brokers Association (PCBA) and Pakistan Cotton Ginners Association (PCGA) and many other textile associations are supporting APTM’s move.
APTMA for removing yarn & fabric from ambit of EFS
On the occasion, Naveed Ahmed, Chairman of APTMA Southern Zone, Khawaja Muhammad Zubair, Chairman PCBA and Dr Jassu Mal PCGA, Yasin Siddik former chairman APTMA, Asif Inam and others were also present.
“FY25 budget removed sales tax exemption on local inputs under EFS; however, imports are sales tax-free and duty-free. This move is directly hurting the domestic industry”, Kamran Arshad
He mentioned that some 18 percent sales tax on local inputs is refundable, but refunds are delayed, incomplete, and costly to process, especially disadvantageous to SMEs. Due to this disparity, over 120 spinning mills and 800 ginning factories have already shut down; looms are also closing and loom workers are protesting on streets in Faisalabad. SMEs are specifically disadvantaged as they have fewer channels for import and pay sales taxes at every stage. In addition, only 60 to 70 percent of refunds are issued, while the rest are stuck in manual processing with no progress in the last 4-5 years, he added. “Due to cheap import of yarn and fabric, exporters strongly prefer imported inputs, resulting in disadvantageous local suppliers.”
There is a massive $1.5 billion increase in import of only cotton, yarn and greige cloth compared to export growth of $1.4 billion in FY25. The import of these items rose from $2.19 billion in FY24 to $3.64 billion in FY25, he mentioned.
Chairman APTMA said that subjecting local supplies to 18 percent sales tax while bestowing zero rating on imports is an anti-Pakistan policy that is bleeding the economy within. He informed that APTMA has pushed as much as it can for restoration of the EFS to its June 2024 position with sales tax zero-rating on local supplies. “We have held meetings with the Minister Finance, Chairman and Members FBR, IMF representatives; however, the IMF has not agreed to restoration.”
He said a high-level committee was also formed led by Ahsan Iqbal, Minister for Planning Development & Special Initiatives of Pakistan for negotiation with IMF; however, the meeting could not hold.
Copyright Business Recorder, 2025
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