ISLAMABAD: The All Pakistan Textile Mills Association (APTMA) has urged the Federal Board of Revenue (FBR) to exclude woven cotton fabric falling under Chapter 52 of the Pakistan Customs Tariff from the scope of the Export Facilitation Scheme (EFS) to ensure a level playing field for the domestic industry.
In a letter addressed to the Chairman FBR, APTMA referred to SRO 1435(I)/2025 dated August 5, 2025, under which raw cotton, cotton yarn, and grey cloth were excluded from the EFS.
According to APTMA, following the exclusion of grey cloth, unscrupulous importers have begun importing semi-processed or partially processed varieties of grey cotton fabric to defeat the intent and purpose of excluding these items from the scheme.
“Due to this modus operandi, the local upstream industry continues to face a significant disadvantage, as imports of these inputs under the EFS remain zero-rated, while supplies of locally produced identical products are subjected to sales tax at the standard rate of 18 percent,” said APTMA Chairman Kamran Arshad in the letter.
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APTMA stated that the misuse of EFS exemptions through mis-declaration was earlier highlighted in its letter dated December 11, 2025.
In that correspondence, it was specifically explained that grey cotton fabric was still being imported under alternative descriptions, including but not limited to “Prepared for Dyeing.”
However, APTMA regretted that despite drawing the FBR’s attention to the issue, the malpractice of importing grey fabric through mis-declaration has continued unchecked.
To curb the abuse of EFS by mis-declaring grey cloth under different descriptions, APTMA proposed that all types of woven cotton fabric falling under Chapter 52 of the Pakistan Customs Tariff be excluded from the scope of the EFS.
APTMA emphasized that urgent action is required to protect the local textile industry from the onslaught of massive cotton fabric imports.
Copyright Business Recorder, 2026
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