Islamabad, October 14, 2026: The Pakistan Textile Council (PTC) has urged Prime Minister Shehbaz Sharif to reject proposals seeking the removal of yarns and fabrics from the Export Facilitation Scheme (EFS), warning that further restrictions could increase production costs and weaken Pakistan’s textile exports.

In a letter to the prime minister, PTC Chairman Fawad Anwar expressed concern over demands to exclude textile materials covered under Chapters 52 and 55 of the Pakistan Customs Tariff.

The council maintained that restricting access to imported raw materials could create serious challenges for value-added textile exporters competing in international markets.

Pakistan Textile Council Opposes Further EFS Restrictions

The Pakistan Textile Council called on the federal government to maintain the Export Facilitation Scheme for all legitimate export-related inputs.

According to the council, some industry associations representing domestic manufacturers have demanded additional restrictions on yarn and fabric imports.

PTC argued that these proposals contradict an understanding reached during earlier consultations that no further exclusions would be introduced.

The council acknowledged concerns about misuse of the scheme but insisted that genuine exporters should not face additional financial burdens because of violations committed by individual businesses.

Copies of the letter were also forwarded to the Federal Board of Revenue (FBR) chairman and the secretary of the Ministry of Commerce.

What Is the Export Facilitation Scheme?

The Export Facilitation Scheme allows eligible exporters to obtain raw materials and other inputs with exemptions from specified duties and taxes, subject to regulatory conditions.

The programme is designed to reduce production costs and help Pakistani businesses compete in international markets.

Textile manufacturers use the scheme to obtain materials needed for producing garments, home textiles and other export products.

However, concerns have emerged over the possible misuse of duty-free imports, including under-invoicing, incorrect declarations and the diversion of imported goods into domestic markets.

These concerns have led some manufacturers to demand tighter restrictions on products eligible for EFS benefits.

Previous Restrictions Increased Exporters’ Financial Burden

The PTC pointed out that the government had already excluded raw cotton, cotton yarn and grey cloth from the scheme in 2025 through SRO 1359(I)/2025.

According to the council, those restrictions forced exporters to pay taxes upfront on certain imported materials.

The additional payments increased pressure on working capital and raised production expenses.

PTC warned that excluding more yarns and fabrics could further increase costs for garment manufacturers and other value-added exporters.

The council also cautioned that additional restrictions might discourage investment in textile production facilities and reduce confidence among international buyers.

Global Textile Industry Shifts Towards Synthetic Fibres

The Pakistan Textile Council highlighted the growing importance of man-made fibres (MMF) in international textile markets.

Citing the Textile Exchange Materials Market Report 2025, the council presented the following figures:

The council further stated that man-made fibre products account for approximately 63% of global textile and apparel trade.

In comparison, such products represent only about 12% of Pakistan’s textile and apparel exports, according to PTC.

The figures highlight Pakistan’s relatively limited participation in a rapidly expanding segment of the global textile industry.

Pakistan Faces Competition From Bangladesh and China

The council warned that Pakistan risks falling behind competing textile-exporting countries if manufacturers cannot access competitively priced raw materials.

Bangladesh, for example, aims to increase the share of man-made fibres in its apparel exports from approximately 24% to 40% by 2030.

PTC also noted that Pakistan has limited domestic production of viscose and lyocell fibres.

Meanwhile, local polyester manufacturers face cost and production-scale disadvantages compared with suppliers in China and Southeast Asia.

As a result, Pakistani exporters frequently depend on imported synthetic yarns and fabrics to fulfil international orders.

The council argued that restricting these imports could make Pakistani garments less competitive in global markets.

Domestic Textile Manufacturers Demand Stronger Protection

The debate over the EFS has exposed differences between export-oriented manufacturers and domestic textile producers.

The All Pakistan Textile Mills Association (APTMA) has supported excluding additional yarns and fabrics from the scheme.

APTMA argues that duty- and tax-free imported materials can create unfair competition for domestic manufacturers, whose products face sales tax.

The association has also raised concerns about alleged import misdeclaration and the diversion of EFS materials into local markets.

It has urged authorities to strengthen customs enforcement and protect local spinning and weaving industries.

These allegations and policy concerns form part of the wider debate over how to support exporters while ensuring fair competition for domestic suppliers.

PTC Calls for Strict Action Against EFS Misuse

While opposing additional restrictions, the Pakistan Textile Council expressed support for government action against fraudulent import practices.

The council urged the FBR and Pakistan Customs to strengthen enforcement through improved monitoring and verification procedures.

Its recommendations included:

• Conducting audits of raw material consumption against export production.

• Matching EFS import records with export documentation.

• Introducing risk-based customs examinations.

• Taking strict legal action against under-invoicing and misdeclaration.

• Preventing imported materials from being illegally diverted into domestic markets.

PTC maintained that authorities already possess the legal powers and institutional mechanisms needed to investigate such violations.

The council argued that enforcement against individual offenders would be more effective than imposing broad restrictions on legitimate exporters.

Textile Council Proposes Zero-Rating for Local Suppliers

To address the concerns of domestic manufacturers, PTC recommended restoring zero-rating on local supplies of materials to businesses operating under the Export Facilitation Scheme.

The council argued that this approach could improve competition between locally produced and imported inputs without increasing exporters’ costs.

It maintained that fair taxation and stronger enforcement would help protect domestic manufacturers while preserving access to essential export materials.

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Government Decision Could Affect Pakistan’s Textile Exports

The federal government has yet to announce a final decision on the latest proposals to exclude additional yarns and fabrics from the EFS.

The outcome could have important implications for Pakistan’s textile industry, which remains the country’s largest export sector.

While domestic manufacturers are seeking stronger protection against unfair competition, export-oriented businesses are calling for continued access to affordable raw materials.

The Pakistan Textile Council has urged Prime Minister Shehbaz Sharif to adopt a balanced approach that prevents misuse of the scheme without undermining export competitiveness.

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