ISLAMABAD: The All Pakistan Textile Mills Association (Aptma) has called on the Federal Board of Revenue (FBR) to take urgent action against the misdeclaration of grey cotton fabric imports under the Export Facilitation Scheme (EFS), warning that ongoing malpractice threatens the competitiveness of the domestic textile industry.
In a letter addressed to FBR Chairman Rashid Mahmood Langrial, Chairperson of Aptma Kamran Arshad noted that despite the exclusion of grey cloth, raw cotton and cotton yarn from the EFS under SRO 1435(I)/2025 dated August 5, 2025, unscrupulous importers are circumventing the rules by labelling partially processed or greige fabric as ‘prepared for dyeing’ (PFD) to avail tax benefits illegally.
“This ongoing abuse of EFS exemptions is placing the local upstream textile industry at a significant disadvantage,” the letter stated. “Imports of misdeclared fabric enjoy zero-rated duties while locally produced identical products remain subject to an 18 per cent sales tax, undermining fair competition and threatening domestic manufacturing units.”
APTMA highlighted that the issue was first flagged in December 2025, yet the malpractice continues unchecked. The association urged the FBR to exclude all woven cotton fabrics under Chapter 52 of the Pakistan Customs Tariff from the EFS to restore a level playing field for domestic producers.
The letters also called for a comprehensive audit of EFS users, citing repeated instances where imported inputs under the scheme have been diverted for domestic consumption, violating EFS regulations and resulting in revenue losses to the exchequer. Aptma emphasised that matching imported inputs against actual exports is essential to prevent misuse and maintain the integrity of the scheme.
“This is not just a matter of compliance; it is about safeguarding the viability of local weaving units, protecting jobs, and ensuring the domestic industry can compete fairly with imported products,” said Kamran Arshad.
Industry experts agree that misdeclaration of greige cotton fabric under EFS has long been a challenge, particularly since the zero-rating on local supplies was withdrawn in FY2024. Analysts warn that unless stricter enforcement and audits are undertaken, domestic textile manufacturers could face increasing pressure from imports that exploit loopholes in the scheme. The letters were also copied to senior FBR officials, including Member Customs (Policy) Ashaad Jawwad and Member IR (Operations) Zubair Bilal.
