Pakistan’s textile industry is calling on the government to act urgently on budget promises aimed at protecting the domestic sector.
In a formal letter to Finance Minister Muhammad Aurangzeb, the All-Pakistan Textile Mills Association (APTMA) reminded the government of its commitment to impose an 18% sales tax on imported cotton fiber, yarn of all kinds, and greige fabric. The measure was intended to create a level playing field for local producers, while keeping these items under the Export Facilitation Scheme (EFS).
APTMA said its original request was for a complete exclusion of these products from the EFS, citing the harm caused by cheap, unnecessary imports. However, it accepted the government’s budget pledge to equalize the tax treatment of imported and domestic raw materials for export purposes.
But over a month after the budget announcement, the promised tax changes have not been implemented. The July 15 deadline, set by the Deputy Prime Minister’s Committee, has passed without the issuance of the necessary SRO, leaving the industry in limbo.
The timing of the delay is critical. The new cotton crop has entered the market, yet mills and traders are avoiding purchases because imported alternatives remain cheaper under the current tax regime. This has crippled demand for locally grown cotton and domestic yarn, APTMA warned.
Despite the textile sector contributing over half of Pakistan’s exports and achieving a $1.5 billion growth in FY25, the industry still saw imports rise by $1.5–2 billion, nullifying any gains for the balance of payments.
APTMA cautioned that Pakistan’s fragile current account is temporarily supported by low global oil and gas prices, a cushion that will not last. The industry insists that policy incentives must prioritize domestic value addition to strengthen long-term economic resilience.
“Without decisive action, the textile sector’s ability to drive export growth will be undermined,” the association said.