Pakistan Textiles Group’s exports rose by 9.67% during the first half (July-December) of fiscal year 2024-25, reaching $9.084 billion compared to $8.283 billion in the same period last year, according to Pakistan Bureau of Statistics (PBS) data. ).
Textile exports in December 2024 saw an increase of 5.55% year-on-year, reaching $1.477 billion compared to $1.399 billion in December 2023. On a monthly basis, textile exports increased by 1.11% from $1.461 billion in November 2024.
The major export commodities in December 2024 included knitwear (Rs. 108.94 billion), ready-made garments (Rs. 99.33 billion), other rice items (Rs. 86.80 billion), nightwear (Rs. 71.25 billion), and cotton fabrics (Rs. 41.39 billion). Sugar (Rs. 40.57 billion), towels (Rs. 24.55 billion), pharmaceutical products (Rs. 17.63 billion), and cotton yarn. (Rs. 17.46 billion), and makeup items excluding towels and bed linen (Rs. 16.40 billion).
On the other hand, the All Pakistan Textile Mills Association (APTMA) has urged the Federal Board of Revenue (FBR) to address critical issues affecting the textile sector, including restoring a level playing field for domestic inputs and ensuring timely full refunds to exporters. .
In a letter to FBR Chairman Rashid Mahmud Langriyal, APTMA Secretary General Shahid Sattar highlighted the findings of a study conducted by PIDE Chairman Dr Nadimul Haq. The study, which focused on the impact of the withdrawal of zero-rated tax credits/sales tax on domestic supplies, stressed the urgent need for policy reforms to maintain the sector’s competitiveness and contribution to the national economy.
The study warned that the current tax structure creates an imbalance between local and imported inputs, harming local cotton producers, spinning units and the formal textile sector. Potential economic losses were estimated at more than 1.7 trillion Pakistani rupees, equivalent to 2% of GDP, due to higher input costs and subsequent closures, job losses, and reduced exports.
The report recommended the restoration of tax credits or sales tax on domestic inputs for export manufacturing under the Export Facilitation Scheme (EFS). Instead, it has been proposed to levy equal GST on imported inputs, with the condition that the refund system be reformed to ensure prompt and full payment.
He also suggested:
- Reducing the audit/reconciliation period from five years to six months.
- Enhanced monitoring through algorithmic verification of transactions.
- Strict enforcement of eligibility criteria for tax benefits and penalties for violations.
- Promote digitization to simplify the refund process and improve liquidity for issuers.
The study acknowledged the shortcomings of the European financial system, but noted that misuse, including the diversion of inputs to domestic markets, was limited and could be curbed through targeted adjustments.
The withdrawal of the zero rating has stressed the textile sector and negatively affected the agriculture and services industries. Due to delayed refunds, exporters face cash flow challenges, which undermines confidence between stakeholders and tax authorities.
APTMA stressed that stable tax policies and realistic exchange rates are crucial for the sustainability of exports and the integration of Pakistan’s value chain into global markets.
APTMA urged the FBR to act quickly to address these challenges, restore the vitality of the textile sector, and protect millions of livelihoods that depend on the industry. “Immediate reforms are necessary to prevent further damage to Pakistan’s textile sector,” Sattar said.