Aptma warns textile industry collapse imminent over ‘export policy flaws’

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ISLAMABAD: The textile industry has been teasing to the brink of destruction due to the government’s constant failure over the past ten months to overcome a significant flaw in the Export Facility Scheme (EFS), warning the All Pakistan Textile Mills Association (APTMA) in a press release on Monday.

According to the APTMA, this policy has formed a severely distorted tax government that destroys domestic manufacturing, eliminates local supply chain, and puts Pakistan’s textile value chain at the mercy of foreign suppliers.

Optima Chairperson Kamran Irshad called on the government to immediately remove the yarn and fabric from the EFS import list. “This is the only way to prevent further destruction of Pakistan’s textile industry,” he said. “No country can industrial by destroying its supply chains and replacing imports. The dream of exporting $ 60 billion can be felt through measures like Aran Pakistan if it comes at the cost of the domestic industry.”

Under the current scheme, exporters can import raw materials and inputs on zero percent sales tax, while the same domestic developed is subject to 18 % sales tax. Technically, this tax generates considerable financial and administrative burden.

The press release states that “the refund process takes six to 10 months, in the meantime the capital is shut down.” “Despite the refund within 72 hours, only 60-70 % of claims are paid monthly, the rest of the manual processing is delayed indefinitely. A backbone of more than 1110 billion has not been clear for the past four to five years.”

As a result, many exporters now prefer imported inputs. For example, yarn imports are already higher than double historic peaks and is likely to reach 300 million kilograms in the financial year 25 – which is about three times higher than 108 million kilograms recorded in FY24.

It is expected that only three major raw materials – cotton, yarn, and graduate fabric will exceed $ 1.5 billion last year, while exports are only likely to increase by $ 1.14 billion. “That means more dollars are coming out than coming,” said Optima. “The heading export figures are misleading – the industry is hollow.”

More than 800 ginning factories and 120 spinning mills have already closed, resulting in the loss of millions of jobs. The crisis has now reached the field of construction, in which looms and workers have protested on the streets.

Optima has warned that the country is exporting imported goods effectively while the local industry, employment and investment are ending. The cotton sector faces further disaster, the next season increases and there will be no explanation as to who will buy the expected 10 million bales. In the mid -2010’s, cotton production has already dropped from 15 million bales to 5 million and 10 million today.

Although recent reforms – such as losing the ban on import of cotton seeds and adopting modern farming techniques under the Green Pakistan move – is commendable, Optima emphasized that the biggest obstacle to cotton restoration is the current sales tax government.

18 % tax is imposed on domestic cotton, while imported cotton enters tax free under EFS. Even cotton and cotton cakes face 18 % tax. This is an unprecedented process globally. Since farmers bear the cost of this tax, their income is reduced to production costs. With the reduction of the spinning industry, the demand for cotton has collapsed, and without the price guarantee, many farmers are going to the most alternatives to water, which is damaging the country’s water crisis. “The destruction of the cotton sector would endanger more livelihoods,” Optima concluded, “immediately demanded immediate reform measures before the improper damage was caused.