The Pakistan Textile Council (PTC) has urged the federal government to preserve the Export Facilitation Scheme (EFS) for all legitimate export inputs, warning that further restrictions on yarns and fabrics could raise production costs and weaken Pakistan’s textile export competitiveness.
In a letter dated October 13, 2026, PTC Chairman Fawad Anwar asked Prime Minister Muhammad Shehbaz Sharif to reject demands for the exclusion of all yarns and fabrics covered under Chapters 52 and 55 of the Pakistan Customs Tariff. Copies of the letter were also sent to the Federal Board of Revenue (FBR) chairman and the secretary of the Ministry of Commerce.
PTC Opposes Further Restrictions on Export Facilitation Scheme
The council welcomed government measures to curb misdeclaration and misuse of the EFS but cautioned against expanding restrictions on inputs used by legitimate exporters.
According to PTC, associations representing businesses primarily focused on the domestic market are seeking further exclusions after raw cotton, cotton yarn and grey cloth were removed from the scheme in 2025 through SRO 1359(I)/2025.
The council said these demands ran contrary to the understanding reached during earlier consultations that no additional exclusions would be sought.
PTC Chairman Fawad Anwar warned that accepting the proposals could cause serious and lasting damage to Pakistan’s value-added exports.
Global Textile Demand Shifts Towards Man-Made Fibres
PTC highlighted the growing importance of man-made fibres (MMF) in international textile and apparel markets, arguing that Pakistani exporters need access to a wider range of imported inputs to remain competitive.
Citing Textile Exchange’s Materials Market Report 2025, the council stated that synthetic fibres accounted for 69% of global fibre production in 2024, while cotton’s share declined to 19%.
MMF-based products account for approximately 63% of global textile and apparel trade, compared with around 12% of Pakistan’s textile and apparel exports, according to the letter.
The council also pointed to Bangladesh’s efforts to expand its position in the segment. Bangladesh is targeting an increase in the MMF share of its apparel exports from approximately 24% to 40% by 2030.
PTC argued that these developments underline the importance of enabling Pakistani exporters to source the materials increasingly demanded by international buyers.
Domestic Supply Limitations Increase Exporters’ Costs
The council noted that Pakistan has almost no domestic production of viscose or lyocell fibres, while its polyester value chain faces cost and scale disadvantages compared with producers in China and ASEAN countries.
As a result, value-added exporters depend on imported MMF yarns and fabrics to manufacture products that meet international buyers’ specifications and fulfil export orders.
PTC warned that further restrictions on these imports would limit access to essential raw materials and make Pakistani products less competitive in international markets.
The council added that buyers often specify the type and quality of yarns and fabrics required for their orders, making the availability of suitable inputs important for securing and delivering export contracts.
Existing EFS Exclusions Already Add Liquidity Pressure
PTC said the exclusions introduced in 2025 had already increased financial pressure on exporters by requiring them to pay taxes upfront on affected inputs.
The council warned that extending the exclusions to all yarns and fabrics under Chapters 52 and 55 would increase input costs and tie up working capital for apparel and made-ups manufacturers.
According to the letter, the proposed restrictions could have several consequences:
- Higher production costs and additional working-capital requirements for exporters.
- Reduced access to fibres driving global apparel demand.
- Lower incentives to invest in new value-added and MMF-based production capacity.
- Weaker confidence among international buyers seeking reliable sourcing destinations.
PTC argued that these pressures could undermine the development of higher-value textile exports at a time when international markets are increasingly embracing synthetic and other man-made fibres.
PTC Supports Stronger Action Against EFS Misuse
While opposing further blanket exclusions, the council reiterated its support for firm action against misdeclaration, under-invoicing and the diversion of EFS imports into the domestic market.
PTC maintained that the FBR and Pakistan Customs have the legal powers, systems and personnel needed to identify and prosecute violations. It also cited recent detections as evidence that enforcement measures can be effective.
The council argued that misconduct by some businesses should not result in additional costs for legitimate exporters or restrictions on a scheme considered important to export competitiveness.
Instead, it called for stronger monitoring and targeted enforcement to distinguish genuine export-related imports from transactions involving misuse of the facility.
Three Measures Proposed to Protect Export Competitiveness
PTC has requested the prime minister’s intervention on three key measures.
First, the council wants the EFS to remain available for all legitimate export inputs, without further exclusions of yarns and fabrics covered under Chapters 52 and 55.
Second, it has called on the FBR to strengthen enforcement through input-output coefficient audits, reconciliation of EFS imports with export documentation, risk-based examinations and strict penalties for offenders.
Third, PTC has proposed addressing concerns raised by domestic suppliers by restoring zero-rating on local supplies of inputs to EFS users, rather than imposing taxes on imported inputs.
The council believes these measures would allow the government to address misuse while maintaining access to competitively priced materials for export-oriented manufacturers.
Textile Exports Depend on Competitive Input Access
PTC reiterated that textiles and apparel remain Pakistan’s largest export sector and that the industry’s growth depends on access to the inputs required by international markets.
The council urged the government to balance enforcement against misuse with policies that support genuine exporters, particularly manufacturers seeking to expand into higher-value and MMF-based products.
The debate over further EFS exclusions highlights a broader policy challenge: protecting domestic suppliers and preventing abuse while ensuring that export-oriented businesses can source materials at competitive costs.
PTC reaffirmed its willingness to work with the government to strengthen compliance and protect the country’s foreign exchange earnings without undermining legitimate export activity.