By SKM
March 26, 2026
ISLAMABAD: The All Pakistan Textile Mills Association has sounded the alarm over what it calls “massive abuse” of the Export Facilitation Scheme (EFS), warning that unchecked misdeclaration of fabric imports is causing heavy revenue losses and eroding the competitiveness of the domestic textile industry.
In a letter to Bilal Azhar Kayani, Minister of State for Finance, the association alleged that importers are circumventing restrictions on greige (unprocessed) fabric by declaring it under vague categories such as bleached, semi-bleached, or semi-finished fabric to continue availing duty- and tax-free entry under the scheme.
The concerns were formally raised during a February 26 meeting of the Technical Committee reviewing EFS utilization. APTMA told the committee that despite the exclusion of greige fabric through SRO 1359(I)/2025 issued on July 29, 2025, fabric imports under EFS have posted an abnormal surge—pointing to systemic misdeclaration.
While the committee acknowledged the issue and supported tightening the rules, APTMA expressed disappointment that the follow-up notification—SRO 528(I)/2026 issued on March 19, 2026—failed to include measures to curb the alleged malpractice.
The association had earlier flagged the issue with the Federal Board of Revenue, citing data that shows a dramatic spike in imports of bleached cotton fabric under EFS.
According to APTMA, imports of bleached fabric jumped to 1,911 tonnes in February 2026, compared to just 23 tonnes in February 2025—an increase of around 8,200 percent year-on-year after unprocessed fabric was excluded from the scheme.
Industry players say the design of the scheme is worsening the problem. Imports under EFS are exempt from sales tax, while locally produced goods supplied for export remain taxed—putting domestic manufacturers at a clear disadvantage.
APTMA alleged that some importers are exploiting this gap by misdeclaring greige fabric as processed variants to claim exemptions, resulting in revenue leakage and distortion of fair competition.
“The local industry cannot compete with the influx of misdeclared, duty- and tax-free fabric,” the association warned, cautioning that continued abuse could inflict lasting damage on Pakistan’s textile sector.
APTMA has urged the government to immediately expand the exclusion list under EFS to include semi-bleached and bleached cotton fabric, semi-finished fabric, and materials categorized as Prepared for Dyeing (PFD) and Prepared for Garment Dyeing (PFGD).
It has also sought a meeting with the finance ministry to present further evidence and press for corrective action.
In parallel, the association has called on customs authorities to step up enforcement, recommending stricter port scrutiny, random physical inspections, laboratory testing, and tighter valuation controls to detect misdeclaration.
Copies of the letter were sent to senior officials of the FBR, including Chairman Rashid Mahmood Langrial, Member Customs-Operations Syed Shakeel Shah, and Member Customs-Policy Ashaad Jawwad.
APTMA warned that without immediate intervention, the alleged misuse of EFS could undermine a key pillar of Pakistan’s exports and industrial economy.
Ends
