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ISLAMABAD: Textile exporters in Pakistan have called on the federal government to reverse key budgetary policies, warning that continued disruption of supply chains could severely impact over $9 billion in value-added textile exports.
In a joint letter to Prime Minister Shehbaz Sharif, the Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) and the Pakistan Hosiery Manufacturers and Exporters Association (PHMA) demanded swift intervention. The two leading bodies asked for an immediate meeting to address tariff barriers and restrictive policies that, they say, are throttling Pakistan’s textile export sector.
The associations identified four major concerns for the upcoming fiscal year’s budget. One of the biggest issues was recent changes to the Export Facilitation Scheme (EFS), which they argue have negatively impacted small and medium-sized enterprises (SMEs). They urged the government to restore the original scheme to preserve international competitiveness and meet buyer expectations.
Textile exporters also called for the reinstatement of the final tax regime, stating that it would reduce administrative burdens and compliance costs for SMEs. They emphasized that this move is essential for the financial health of value-added exporters.
Additionally, both associations requested automated and timely disbursement of sales tax and customs rebates, as well as reimbursements under the Drawback of Local Taxes and Levies (DLTL) and Duty Drawback of Taxes (DDT) schemes. They proposed a simplified, paperless approach to DLTL to ease liquidity constraints.
Zero Tariff Apparel Deal with the U.S. Proposed
To enhance global competitiveness, the associations suggested that the government negotiate a zero-for-zero apparel tariff agreement with the United States. With Pakistan currently facing 29% tariffs, they argued that such an agreement could unlock new growth opportunities.
The joint letter warned of dire consequences if the government fails to act swiftly, highlighting the risk of mass factory closures, foreign exchange losses, and rising unemployment. They insisted these steps were vital to protecting Pakistan’s top employment-generating export sector and achieving the $100 billion export target.
The textile exporters stressed that global buyers increasingly demand certified, high-performance materials that are unavailable locally. Yet, the import of such raw materials remains hindered by duties and outdated policies.
PRGMEA Regional Chairman Dr. Ayyazuddin and PHMA Zonal Chairman Abdul Hameed emphasized the need for immediate access to critical imports, especially synthetic and functional textiles. They noted that while 80% of the global apparel trade now involves synthetic textiles, Pakistan still heavily relies on cotton-based exports like denim and fleece.
Hameed highlighted that many essential materials—like artificial fibers, technical yarns, and trims listed under HS Chapters 54, 55, and 96—are not manufactured in Pakistan but are still taxed. “Keeping tariffs on non-available raw materials is equivalent to taxing exports before they even happen,” he said.
Former PRGMEA chairmen Ijaz Khokhar and Sajid Saleem Minhas backed these claims. They criticized rigid policies and the reduced EFS input period, from 60 months to just nine, as unrealistic for the industry. They argued that value-added exporters often rely on just-in-time business models and need longer input cycles.
Urgent Marketing and Refund Solutions Needed
Khokhar added that refund delays were causing severe cash flow issues. Exporters await billions in delayed DLTL, DDT, and sales and withholding tax refunds. The associations called for an automated, time-bound refund system to relieve financial stress.
Minhas highlighted the underperformance of the local spinning sector, noting its inability to meet modern global demands. He argued for duty-free imports of materials not produced in Pakistan to help exporters tap into high-growth markets.
Both associations also urged the Ministry of Commerce to run a global marketing campaign for “Made in Pakistan” apparel. They suggested leveraging embassies, digital platforms, and targeted B2B events to boost brand visibility and international outreach.
