Textile body urges PM to retain export facilitation scheme for yarns, fabrics

The Pakistan Textile Council (PTC) has urged Prime Minister Shehbaz Sharif to retain the Export Facilitation Scheme (EFS) for all legitimate export inputs and reject further exclusions of yarns and fabrics, warning that such restrictions could undermine Pakistan’s value-added textile exports.

In a letter to the prime minister, PTC Chairman Fawad Anwar opposed demands to exclude all yarns and fabrics falling under Chapters 52 and 55 of the Pakistan Customs Tariff from the scheme. The council also sent copies of the letter to the Federal Board of Revenue (FBR) chairman and the secretary of commerce.

The council appreciated the government’s efforts to curb misdeclaration and misuse of the EFS but said further exclusions would hurt exporters supplying international markets.

“Accepting these demands would cause serious and lasting harm to Pakistan’s value-added exports,” Anwar said in the letter.

The PTC noted that the government had already removed raw cotton, cotton yarn and grey cloth from the scheme in 2025 through SRO 1359(I)/2025. It said the latest demands contradicted the understanding reached during earlier consultations that no further exclusions would be sought.

Highlighting shifts in global textile demand, the council cited Textile Exchange’s Materials Market Report 2025, which found that synthetic fibres accounted for 69 percent of global fibre production in 2024, while cotton’s share stood at 19 percent.

Man-made fibre (MMF)-based products account for around 63 percent of global textile and apparel trade, compared with approximately 12 percent of Pakistan’s textile and apparel exports, according to the PTC.

The council said competing countries were expanding their presence in the segment, noting that Bangladesh aimed to increase the share of MMF in its apparel exports from around 24 percent to 40 percent by 2030.

Pakistan has almost no domestic viscose or lyocell fibre production, while its polyester value chain faces cost and scale disadvantages compared with Chinese and Association of Southeast Asian Nations (ASEAN) producers, the letter stated.

As a result, value-added exporters depend on imported MMF yarns and fabrics, many of which are specified by international buyers, to secure and fulfil orders.

The PTC warned that the 2025 exclusions had already forced exporters to pay taxes upfront on affected inputs, increasing liquidity pressures and production costs. Further restrictions on yarns and fabrics under Chapters 52 and 55 could raise input costs, tie up working capital and discourage investment in value-added and MMF-based production capacity.

The council also cautioned that the proposed exclusions could weaken international buyers’ confidence in Pakistan as a reliable sourcing destination.

On concerns about misuse of the scheme, the PTC backed strict action against misdeclaration, under-invoicing and diversion of imports into the domestic market. It said the FBR and Pakistan Customs had the legal powers, systems and personnel to identify and prosecute offenders, adding that recent detections demonstrated the effectiveness of enforcement measures.

“The misuse of a few cannot justify penalising genuine exporters or dismantling a scheme that is central to export competitiveness,” Anwar said.

The council urged the prime minister to ensure that the EFS remained available for all legitimate export inputs, with no further exclusions of yarns and fabrics under Chapters 52 and 55.

It also called for stronger enforcement through input-output coefficient audits, reconciliation of scheme imports with export documents, risk-based examinations and strict penalties for offenders.

Instead of taxing imported inputs, the PTC proposed addressing concerns of domestic suppliers by restoring zero-rating on local supplies of inputs to EFS users.

The council said textiles and apparel remained Pakistan’s largest export sector and that its growth depended on competitive access to the inputs demanded by global markets. It reaffirmed its willingness to work with the government to prevent misuse while protecting legitimate exporters and foreign exchange earnings.