APTMA demands level playing field, removal of GST on local inputs

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KARACHI: Key stakeholders in Pakistan’s textile sector have jointly urged the government to immediately eliminate 18 % general sales tax (GST) on locally manufactured cotton, yarn and fabric, otherwise it has a severe damage to the imported yarn and fabric.

Addressing a joint press conference at the home of the All Pakistan Textile Mills Association (APTMA) in Karachi on Tuesday, the Chairperson of the Karachi Cotton Association (KCA) Khwaja Zobir was also attended by the Central Chairperson Optima Kamran Arshad. Mahesh Kumar, Representative of the Pakistan Cotton Generals Association (PCGA). The Convener of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Cotton Committee Sham Lal. And other industry leaders, including former Optima Central Chairperson Asif Anim and Yin Sidak.

Speakers condemned the policy of applying 18 % GST on local goods, while maintaining a zero rating on imported inputs, calling it a “anti -Pakistan policy that is bleeding from the economy”.

Although sales tax on local cotton and yarn is technically refundable, the group pointed out that the refund processing is delayed, low payment and bureaucratic disqualification. He claimed that “only 60-70 percent of the refund is processed, and has been stuck in the manual system for the remaining 4-5 years.” In particular, small and medium -sized businesses (SMEs) suffer significant losses due to these delays.

Textile industry leaders insisted that they are not opposed to exports but are demanding a level playground. He argued that the EFS has increased the import of cotton and yarn instead to increase exports. “Exporters are now preferring the overwhelming majority, separating local suppliers from the edge,” he said.

Providing data for support of their claims, speakers noted that imports of cotton, yarn, and grading fabric increased by $ 1.5 billion – which increased to $ 2.19 billion in fiscal year 25 in fiscal year 25 – while textile exports increased only 1.4 billion during the same period. As a result, pure textile exports will drop from $ 14 billion to $ 13.6 billion.

Speakers also raised the alarm on the broader effects of policy on Pakistan’s textile ecosystem. He reported that more than 120 spinning was found and 800 ginning factorys have already been closed, as well as the closure of the loom of workers on the streets of Faisalabad have been mobilized. He emphasized, “It’s not just about factories – it’s about livelihood.”

He highlighted that the cotton economy is auxiliary between 2 billion to $ 3 billion in rural revenue, especially for women involved in cotton. 18 % of GST implementation of cotton and cotton cakes – which they say is not heard anywhere in the world – taking farmers’ income below the level of sustainability and affecting the poorest.

The group has further claimed that the current policy framework costs a maximum of $ 1.5-2 billion from Pakistan’s cost. He warned that “instead of producing a local price, we are borrowing on expensive loans to pay forable prospects.”

With the basic import of Pakistan from the United States, the speakers noted that Washington had indicated the willingness to export up to 1.5 million bulls. US President Donald Trump has also extended an invitation to the Pakistani trade delegation, proposing to double the country’s cotton exports or even export triple cotton. He warned that “but to absorb such volumes, Pakistan needs a viable and operational spinning industry.”

The group called on the government to restore the EFS as June 2024, and restore zero ratings for local goods. “We have met with the Finance Minister, the FBR leadership, and even the representatives of the IMF,” he said. However, the IMF has so far refused to support the rehabilitation of zero ratings. “