KARACHI: The All Pakistan Textile Mills Association (APTMA) has called on Finance Minister Muhammad Aurangzeb to fulfill the government’s budgetary commitment by imposing an 18% sales tax on imports of cotton fibre, yarn, and greige fabric while retaining these items under the Export Facilitation Scheme (EFS).
In a letter to the finance minister, APTMA Chairperson Kamran Arshad reminded the minister of the government’s pledge to equalize the tax treatment for local and imported textile goods. While APTMA initially requested the complete exclusion of these imports from the EFS, the Finance Minister had assured in the budget speech that a tax would be levied to align the treatment of domestic and imported supplies.
More than a month has passed since the budget speech and almost three weeks since the budget was passed, but the necessary Statutory Regulatory Order (SRO) has yet to be issued. The Finance Minister’s committee had decided to implement the sales tax from July 15, 2025, but this date has come and gone without any action.
The delay in issuing the SRO has coincided with the arrival of the new cotton crop, for which there are no buyers. The lack of a level playing field between imported and locally-produced cotton has reduced demand for domestically grown cotton and manufactured yarn and greige fabric.
Textile exports, which account for over half of Pakistan’s total exports, saw an increase of $1.5 billion in fiscal year 2024-25. However, during the same period, textile imports surged by $1.5 to $2 billion, creating a net loss for the country’s balance of payments.
The current account balance remains precarious, supported only by temporarily low international oil and gas prices, a situation that is not sustainable in the long term. To boost exports, Pakistan needs to focus on increasing the share of domestic value-added products, yet current policies are not aligned with this objective.
APTMA has warned that any further delay in issuing the SRO could result in mill closures, the migration of businessmen abroad, and the loss of hundreds of thousands of jobs. To protect the livelihoods of growers, spinners, and exporters, and to meet the government’s fiscal and export targets, APTMA has urged the immediate issuance of the SRO for the imposition of the 18% sales tax on cotton imports.
