ISLAMABAD: The All Pakistan Textile Mills Association has raised serious concerns over what it describes as widespread misuse of the government’s Export Facilitation Scheme (EFS), warning of significant revenue losses and damage to the domestic textile industry.
In a letter addressed to Minister of State for Finance Bilal Azhar Kayani, Aptma highlighted that importers are allegedly bypassing restrictions on greige fabric by misdeclaring it under vague and misleading descriptions such as bleached or semi-processed fabric. Aptma asked the government to exclude the fabric from the Export Facilitation Scheme (EFS)
The issue was first formally raised during a meeting of the Technical Committee reviewing the EFS utilisation period on February 26, 2026. According to Aptma, despite the government’s earlier decision to exclude greige (unprocessed) fabric from the scheme through SRO 1359(I)/2025 issued on July 29, 2025, imports of fabric under EFS have surged unexpectedly.
Aptma told the committee that this spike suggests systemic misdeclaration, with importers exploiting loopholes to continue bringing in greige fabric duty- and tax-free. While the committee reportedly acknowledged these concerns and supported amendments to curb malpractice, the subsequent notification, SRO 528(I)/2026 issued on March 19, 2026, did not include measures to address the issue.
The association had earlier flagged the matter to the Federal Board of Revenue (FBR) in a letter dated February 28, 2026. It pointed to a dramatic rise in imports of bleached cotton fabric under EFS, which it says casts doubt on the legitimacy of these imports.
According to data shared by Aptma, imports of bleached fabric under EFS jumped to 1,911 tonnes in February 2026, compared to just 23 tonnes in February 2025, an increase of approximately 8,200 per cent YoY following the exclusion of unbleached fabric from the scheme.
Industry stakeholders argue that the structure of EFS is further exacerbating the problem. Imports under the scheme are exempt from sales tax, whereas locally produced goods supplied for export remain subject to sales tax, placing domestic manufacturers at a competitive disadvantage. Aptma alleges that certain importers are deliberately misdeclaring unprocessed fabric as bleached variants to exploit these tax exemptions. This practice, it says, is not only causing losses to the national exchequer but also undermining fair competition and threatening the viability of the local textile sector.
In its appeal, Aptma has called for the immediate exclusion of additional categories from the EFS, including semi-bleached and bleached cotton fabric, semi-finished fabric, and materials categorized as Prepared for Dyeing (PFD) and Prepared for Garment Dyeing (PFGD).
The association has also requested a meeting with the finance ministry to present further evidence and propose corrective measures.Separately, in correspondence with customs authorities, Aptma urged stricter enforcement measures to curb alleged abuse. These include enhanced scrutiny at ports, random physical inspections, laboratory testing, and tighter valuation controls during the clearance process. The letter was also copied to senior officials at the FBR, including its chairperson Rashid Mahmood Langrial, Member Customs-Operations Syed Shakeel Shah, and Member Customs-Policy Ashaad Jawwad.Aptma warned that unless immediate corrective steps are taken, the continued misuse of EFS could inflict long-term damage on the textile industry.
