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ISLAMABAD: The Pakistan Textile Council (PTC) has expressed serious concerns over the Federal Board of Revenue’s (FBR) proposed amendments to the Export Facilitation Scheme (EFS), cautioning that the changes could negatively impact Pakistan’s export sector. According to a statement from the PTC, the modifications outlined in S.R.O. 204 (1)/2025 might introduce operational inefficiencies and impose unnecessary compliance burdens on exporters. The EFS, introduced in 2021, has been instrumental in simplifying export processes and enhancing the competitiveness of the textile sector.
The PTC acknowledged the need for improvements to the scheme but emphasized that the amendments should focus on boosting efficiency rather than disrupting established systems. One of the main concerns highlighted was the extended processing timeline for the Input Output Coefficient Organization (IOCO). As per the proposed changes, IOCO would have 60 days to process applications, allowing exporters only a provisional acquisition of 25% of their declared input goods. The PTC argued that this extended timeline could create significant uncertainty for manufacturers who operate on tight schedules. It recommended reducing the processing time to 30 days and increasing provisional approval to 50% to ensure smoother operations.
Another issue raised by the PTC was the proposed extension of the monitoring timeline for pending cases under the Chief Collector (Exports & IOCO) to 60 days. The council pointed out that this change could further slow down approvals and cause disruptions in supply chains. To maintain a balance between regulatory oversight and efficiency, the PTC suggested retaining the current 30-day timeline.
The PTC also voiced concerns about the annual authorization of input goods based on IOCO assessments, arguing that it could introduce bureaucratic hurdles. It proposed an automatic authorization process upon submission of reconciliation statements, with audits addressing any discrepancies. This approach, the PTC believes, would reduce delays without compromising compliance standards.
Moreover, the proposed reduction in the input utilization period from 60 months to 9 months was deemed impractical by the PTC, which warned that such a move could lead to frequent procurement disruptions and higher costs for exporters. The council recommended a utilization period of at least 24 months, with an additional 6-month extension available through the Regulatory Authority. Any further extensions, it suggested, should require FBR committee approval, aligning with the board’s recommendations.
The PTC also criticized the proposed limitation on B-grade or rejected goods, which would cap their proportion at 5% of total production. Given the natural manufacturing variances, the council urged the FBR to increase this threshold to 10%, in line with industry standards, to prevent undue financial losses for exporters.
Additionally, the elimination of the carry-forward provision for unutilized input goods was highlighted as a significant concern. According to the PTC, removing this flexibility would force exporters to consume input materials faster than their production cycles allow, leading to inefficiencies and financial strain. The council insisted that the carry-forward option should remain in place, allowing exporters to carry unutilized goods into the following year upon submission of reconciliation statements.
The PTC also objected to the proposal of reducing the timeframe for uploading domestic acquisitions with zero-rated sales tax from 30 days to just 7 days. It argued that this drastic cut could lead to administrative bottlenecks and penalties for minor delays. Restoring the original 30-day period, the council suggested, would provide a more practical compliance window for businesses.
The PTC’s statement emphasized that the EFS has significantly contributed to an export-friendly environment in Pakistan, particularly for the textile sector. It highlighted the need for regulatory oversight to prevent misuse but warned that excessive restrictions and prolonged approval processes could hinder the growth of Pakistan’s exports.
To ensure that the proposed amendments support rather than obstruct the growth of the export sector, the PTC called on the FBR to engage in constructive dialogue with industry representatives. By incorporating the council’s recommendations, the PTC believes that the EFS can continue to be an effective framework for exporters while addressing legitimate regulatory concerns.
