The scheme, is reportedly being exploited, leading
to severe disruptions in the domestic textile
industry. APTMA Southern Region
Staff Reporter
Karachi: The All Pakistan Textile Mills Association (APTMA), Southern Region, has sounded the alarm over significant losses and mass unemployment caused by the misuse of the Export Facilitation Scheme (EFS). The scheme, designed to exempt cotton and blended yarn imports from sales tax and duties for export purposes, is reportedly being exploited, leading to severe disruptions in the domestic textile industry.
Industry Struggles with Misuse and Unfair Competition
APTMA revealed that a considerable portion of yarn imported duty-free under EFS is illegally sold in the local market. This practice undermines domestic yarn manufacturers, forcing many to shut down, and causing hundreds of thousands of job losses. While APTMA supports legitimate exporters, it criticizes unscrupulous elements using the scheme to evade taxes, resulting in substantial revenue losses for the government.
“High energy prices, delayed sales tax refunds, and unchecked misuse of duty-free imports have crippled the spinning sector,” APTMA noted. Over 40% of spinning mills have ceased operations, and the cascading effects threaten the entire textile value chain.
Call for Policy Reforms
APTMA has repeatedly urged the government to:
- Revise EFS Policies: Restore the pre-Finance Act 2024 zero-rating on local supplies for export manufacturing.
- Implement Checks and Penalties: Strengthen oversight on firms misusing the scheme and enforce strict penalties for fraudulent activities.
- Prioritize Domestic Industry: Limit EFS licenses to manufacturers and provide local industry with competitive energy prices and efficient sales tax refunds.
A Looming Economic Crisis
The textile sector, a cornerstone of Pakistan’s economy, is pivotal for increasing exports and reducing external debt liabilities exceeding $100 billion over the next five years. APTMA warns that without immediate government intervention, Pakistan risks losing its competitive edge in the global textile and apparel market.
APTMA emphasized the urgency of safeguarding the domestic industry, stating, “Pakistan’s textile value chain is on life support due to flawed policies. The government must act decisively to ensure the sector’s survival and growth.”
