APTMA praises PM, Dar: USD1bn improvement in net textile exports under EFS reforms

LAHORE: All Pakistan Textile Mills Association (APTMA) has congratulated Prime Minister Shehbaz Sharif, Deputy Prime Minister Ishaq Dar, Minister for Finance Muhammad Aurangzeb, Minister for Commerce Jam Kamal Khan, Minister for Planning Ahsan Iqbal, SAPM Industries Haroon Akhtar Khan, Minister of State for Finance Bilal Azhar Kayani, DG SIFC General Asad Cheema and the Federal Board of Revenue (FBR) for uplifting net textile exports by approximately USD 1 billion in FY2026 through EFS reforms.

The Association noted that the government’s measures under the Export Facilitation Scheme (EFS), together with stronger monitoring and enforcement, have helped reduce import dependence and support domestic value addition, with net textile exports rising from USD 10.55 billion in FY2025 to USD 11.48 billion in FY2026 while gross textile exports remained stable at around USD 17.9 billion.

Pakistan’s textile imports declined from USD 7.36 billion in FY2025 to USD 6.46 billion in FY2026, while textile exports increased marginally from USD 17.89 billion to USD 17.93 billion. Consequently, net textile exports, calculated as exports minus imports, improved by approximately USD 930 million, strengthening the sector’s net foreign exchange contribution.

The improvement coincided with a substantial reduction in imports of cotton and cotton yarn, both of which were excluded from EFS in August 2025. Cotton yarn imports declined by 40.17 percent from USD 754.74 million to USD 451.55 million, while import volumes fell by 47.05 percent, from 220,548 tonnes to 116,769 tonnes. Raw cotton imports declined by 43.28 percent, from USD 2.69 billion in FY2025 to USD 1.53 billion in FY2026, also supporting the revival of the domestic cotton crop, with cotton arrivals increasing by 7.53 percent, from 3.796 million bales as of 15 October 2025 to 4.081 million bales as of 15 October 2026, despite a 12.6 percent decline in cotton acreage.

Imported inputs under EFS are exempt from Customs duty and sales tax, whereas locally manufactured inputs are subject to 18 percent sales tax. This gives imported inputs a substantial tax and cash-flow advantage over domestic supplies, placing local upstream segments like spinning and weaving at a competitive disadvantage. The disparity also creates opportunities for misuse through misdeclaration and diversion of duty- and tax-free imports into the domestic market, causing revenue losses and injury to local manufacturers.

Against this background, the reduction in import dependence, greater domestic sourcing and stronger monitoring of EFS imports are positive developments. Importantly, these gains have been accompanied by no decline in gross textile exports, which remained stable at approximately USD 17.9 billion in both years despite difficult global market conditions, weak demand in major export destinations and high domestic costs.

Unlike economies heavily dependent on imported textile inputs, Pakistan possesses an integrated textile value chain extending from cotton farming and ginning to spinning, weaving, processing, garments and home textiles. This industrial ecosystem is a national asset that must be preserved.

The APTMA represents the entire textile value chain and remains committed to increasing exports. However, high energy tariffs, taxation and financing costs continue to undermine the competitiveness of domestic manufacturers. These challenges are compounded when imported inputs receive preferential tax treatment while locally manufactured yarn and fabric carry sales tax and associated cash-flow burdens. Sustainable export growth requires policies that support every segment of the industry, from spinning and weaving to finished products.

The APTMA urged the government to ensure equal tax treatment for locally sourced and imported textile inputs under EFS. Genuine exporters must continue to receive full facilitation, while stronger monitoring and enforcement should prevent misuse and protect domestic industry.

The APTMA once again congratulated the Prime Minister, Deputy Prime Minister, Finance Minister, Commerce Minister, Planning Minister, SAPM Industries, Minister of State for Finance, DG SIFC and FBR on the improvement in net textile exports and expressed hope that the ongoing EFS review would build on these gains by removing tax disparities and encouraging domestic sourcing.

Pakistan’s export policy must focus not only on increasing gross exports but also on maximizing net foreign exchange earnings through domestic value addition. The objective should be higher exports, fewer unnecessary imports and a stronger, more competitive domestic textile industry.

Copyright Business Recorder, 2026