By SKM
February 09, 2026
ISLAMABAD: The All Pakistan Textile Mills Association (APTMA) has raised serious concerns over the ongoing misdeclaration of grey cotton fabric imports under the Export Facilitation Scheme (EFS), warning that such practices threaten the survival of Pakistan’s domestic textile industry and undermine fair trade.
In a strongly worded letter to FBR Chairman Rashid Mahmood Langrial, APTMA Chairman Kamran Arshad highlighted that, despite the exclusion of grey cloth, raw cotton, and cotton yarn from the EFS under SRO 1435(I)/2025 issued on August 5, 2025, importers have exploited loopholes by labeling semi-processed fabrics as “Prepared for Dyeing” (PFD).
“This malpractice is seriously disadvantaging local manufacturers,” Arshad said. “While imports enjoy zero-rated duties under EFS, identical domestic products are subjected to 18% sales tax, creating an uneven playing field and threatening jobs in Pakistan’s textile heartlands.”
APTMA has repeatedly flagged this issue, including letters sent in December 2025 and November 2025, urging the FBR to take corrective action. Despite these warnings, the misdeclaration of greige fabric continues, leaving domestic weaving units vulnerable to unfair competition.
To curb the abuse, APTMA has proposed the exclusion of all woven cotton fabrics under Chapter 52 of the Pakistan Customs Tariff from the EFS, ensuring imports cannot be misdeclared to exploit duty and tax concessions. In addition, the association called for a comprehensive audit of EFS users to detect violators and enforce strict compliance.
The misuse of the scheme, the letters note, goes beyond mere technical violations. Since the withdrawal of zero-rating on local supplies in FY2024, imported inputs under EFS have reportedly been diverted for domestic consumption, further distorting the spirit of the scheme and causing substantial revenue losses to the exchequer.
Industry experts warn that unless the FBR acts swiftly, domestic textile manufacturers could face mounting pressure from cheaper, misdeclared imports, jeopardizing not only production but also the livelihoods of millions of workers across Punjab, Sindh, and Khyber Pakhtunkhwa.
APTMA emphasized that the association stands ready to assist the FBR in audits and enforcement, underlining its commitment to protecting domestic industry, ensuring transparency, and promoting fair trade practices. The letters were also shared with senior FBR officials, including Mr. Ashaad Jawwad, Member Customs (Policy), and Mr. Zubair Bilal, Member IR (Operations), signaling the urgency of government intervention.
As Pakistan’s textile industry navigates both domestic challenges and international trade opportunities, safeguarding the EFS against misuse is seen as a critical step to maintain the sector’s global competitiveness and protect one of the country’s largest employment generators. Ends
