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The All Pakistan Textile Mills Association (APTMA) has raised concerns over the ongoing crisis in the spinning industry, with 40% of mills already shut down and the rest operating below 50% capacity. The crisis stems from issues in the Export Facilitation Scheme (EFS) and a flawed tax policy that favors imports over local raw materials.
APTMA criticized the 18% sales tax on local inputs for export manufacturing, while imported inputs remain tax-free. Exporters must wait up to a year for refunds, forcing many to switch to tax-free imported materials, further weakening local production.
Yarn imports hit a record 32 million kilograms in January 2024, and if this trend continues, imports could triple in FY25, devastating the domestic industry. The spinning sector, already struggling with high energy costs and uncompetitive policies, faces an imminent collapse, jeopardizing $15 billion in investments and millions of jobs.
The crisis has far-reaching impacts on Pakistan’s cotton economy, as the spinning industry consumes 16 million bales of cotton annually. Without local demand, cotton farmers—particularly in South Punjab and Balochistan—face severe financial hardship. Vulnerable groups, such as women cotton pickers, will be the hardest hit.
APTMA urged the government to restore the EFS framework from June 2024 and end the discriminatory tax regime. A graduated sales tax policy, like India’s, could improve compliance and competitiveness. Without immediate intervention, Pakistan’s textile value chain and cotton sector are at risk of total collapse, threatening livelihoods and worsening the country’s fragile economy.
