FAISALABAD: Pakistan Textile Exporters Association (PTEA) has demanded the government to undertake structural reforms to restore competitiveness and stimulate economic growth.
In a statement, PTEA Chairman Sohail Pasha underscored the critical role of the textile sector and said that it contributes significantly to country’s GDP and employment.
He said that the textile export industry is confronted with acute competitive challenges stemming from elevated energy tariffs, an excessive and discriminatory tax regime, and severe liquidity constraints. These factors are undermining the sector’s ability to sustain export growth and retain international market share, he added.
He expressed concern over the slowed growth of the industry, citing high energy costs, excessive taxation, and financial constraints as major impediments.
He stressed the need for rationalization of energy tariffs to align with regional benchmarks, thereby enhancing export competitiveness and improving capacity utilization.
Highlighting taxation challenges, he pointed out that export proceeds are subjected to simultaneous deductions under Section 154 and Section 147.
Banks collect advance tax at 1% as minimum tax, while an additional 1% advance tax is levied under sub-section (6C) of Section 147. In contrast, local supplies are taxed at 1% for textile goods and 0.5% for yarn traders.
He termed this treatment discriminatory and demanded parity in advance tax realization with domestic businesses.
Patron-in-Chief PTEA Khurram Mukhtar raised concerns over unwarranted delays in payment of outstanding refunds, which have trapped a significant portion of exporters’ working capital. This has forced exporters to bear interest costs on delayed refunds.
He called for a structured, automated refund mechanism to process claims within 60 days (deferred tax), and 30 days (income tax) to ensure efficiency and transparency.
He further highlighted the exclusion of cotton, cotton yarn, and fabric from the Export Facilitation Scheme (EFS), coupled with duties on their import, which has escalated production costs and eroded price competitiveness.
He demanded full refund of customs duties paid under EFS, emphasizing that exports must operate under a zero-rated regime.
Vice Chairman PTEA Ameer Ahmad emphasized the need to incentivize value-added textile growth. He proposed a minimum 5% Duty Drawback of Taxes and Levies (DLTL) to offset embedded, non-refunded taxes.
He stressed that the industry’s capital-to-sales ratio must improve to at least 3.5x to support sustainable growth. This, he noted, is unattainable without fundamental reforms in the refund regime, which currently locks up billions of rupees and severely constrains cash flows.
With these reforms, Pakistan’s textile exports could realistically reach US$27 billion by FY2028, driven by improved liquidity, higher productivity, and value-added expansion, he added.
PTEA reaffirmed its commitment to working closely with the government to implement a credible, export-led growth framework that strengthens Pakistan’s economy, generates employment, and enhances foreign exchange earnings.
