The All-Pakistan Textile Mills Association (APTMA) has requested Finance Minister Muhammad Aurangzeb to fulfil the commitment made in the Federal Budget 2025-26.
In a letter to the minister, APTMA remined the minister of the commitment to impose 18 percent sales tax on all imports of cotton fiber, yarn of all kinds, and greige fabric, while retaining these items under the Export Facilitation Scheme (EFS).
“Our original request was for their complete exclusion from the EFS considering the damage caused by unnecessary imports to the domestic industry. Nevertheless, the important correction of equalizing the tax treatment of local and imported supplies for exports was pledged during announcement and presentation of the budget,” the letter said.
It has now been a month and a half since the Budget speech and almost three weeks since the Budget was passed; in accordance with the Deputy Prime Minister’s Committee’s decision, sales tax was to be imposed from 15th July onwards and this date has also passed. Yet the requisite SRO has not been issued, the letter said.
The delay coincides with the arrival of the new cotton crop, for which there are no buyers in the market. The tax disparity has eroded demand for locally grown cotton and domestically manufactured yarn and greige cloth. Given the continued uncertainty regarding the imposition of equivalent sales tax on imports, traders and mills are unwilling to off-take the new crop, it added.
Textiles account for over half of Pakistan’s exports and represent one of the few sectors showing robust growth-exports increased by $1.5 billion in FY25. However, during the same period, textile sector imports rose by approximately $1.5-2 billion, yielding a net loss for the balance of payments.
The current account remains precariously balanced only due to temporarily low international oil and gas prices. This situation cannot be sustained in the medium or long term. Pakistan must increase the share of domestic value addition in its exports, yet current policy incentives run counter to that objective, APTMA said.
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