By SKM
October 12, 2026
ISLAMABAD: All Pakistan Textile Mills Association (APTMA) appreciates the recent crack down by Pakistan Customs against misdeclaration and misuse of the Export Facilitation Scheme (EFS), particularly in fabric imports, and urges further measures to curb illicit imports and safeguard domestic industry.
APTMA chairman Asad Shafi in his statement expressed serious concerns about widespread misuse of EFS and under-invoicing and misdeclaration of imported yarns and fabrics.
Imported inputs under EFS enjoy exemption from customs duty and sales tax, while locally manufactured inputs remain subject to 18% sales tax. This creates an unfair advantage for imported products and encourages diversion of duty- and tax-free imports into the domestic market, causing serious injury to local spinning and weaving industries.
Exclusion of cotton yarn from EFS has already produced positive results. Cotton yarn imports declined by 42%, from 37,175 metric tonnes in the first quarter of FY2026 to 21,587 metric tonnes in the first quarter of FY2027.
However, serious misuse continues in Man-Made (MM) yarns and fabrics under Chapter 55 of Pakistan Customs Tariff. EFS imports of MM yarn increased from 3,056 metric tonnes to 12,773 metric tonnes between FY2024-Q1 and FY2027-Q1, while MM fabric imports rose from 660 metric tonnes to 8,628 metric tonnes during the same period. Synthetic textile exports have not increased correspondingly, raising serious concerns about illegal diversion into the domestic market.
APTMA has continuously been highlighting unabated misdeclaration of fabric imports under EFS. Although unbleached greige fabric was excluded from the scheme, importers have reportedly been declaring such fabric under other descriptions to obtain duty and tax exemptions. Pakistan Customs has recently detected cases where food colouring was applied to fabric to mis-declare it as dyed fabric and evade huge amounts of duties and taxes.
APTMA therefore urges the Government to exclude all sorts of yarns and fabrics falling under Chapters 52 and 55 from EFS to eliminate tax distortions, protect domestic production and employment, and prevent revenue leakage.
APTMA has serious concerns about under-invoicing and misdeclaration of imported yarns and fabrics. Goods are being declared at artificially low values and, in some cases, incorrect quantities and descriptions to evade duties and taxes. This results in revenue losses and allows imported products to be sold at prices domestic manufacturers cannot compete with, forcing local mills to cut production or shut down.
For most of textile products, Customs values are either not fixed or are outdated and unrealistic. Fabric, for example, is valued by weight despite being commercially traded by metre. APTMA calls for quarterly revision of customs values in consultation with industry, effective use of electronic data exchange between Pakistan and foreign customs agencies to verify declared values and quantities, and the formation of a committee comprising FBR, APTMA and other stakeholders to identify irregularities and recommend corrective measures.
APTMA urges immediate intervention by the government to protect domestic manufacturing, safeguard employment and prevent further loss of government revenue.Ends
