Textile council urges PM to reject EFS yarn and fabric exclusion
ISLAMABAD: The Pakistan Textile Council (PTC) has urged Prime Minister Shehbaz Sharif to reject demands seeking the exclusion of all yarns and fabrics falling under Chapters 52 and 55 of the Pakistan Customs Tariff from the Export Facilitation Scheme (EFS). The council warned that an EFS yarn exclusion would cause serious and lasting harm to the country’s value-added exports.
In a letter dated October 13, 2026, PTC Chairman Fawad Anwar wrote to the prime minister asking him to protect the scheme for all legitimate export inputs. Copies of the letter were also sent to the Federal Board of Revenue (FBR) chairman and the commerce secretary.
The council said it fully supports government action against misdeclaration and misuse of the scheme, but noted that associations representing businesses focused on the domestic market are now seeking further exclusions. Raw cotton, cotton yarn and grey cloth were already removed from the scheme in 2025 through SRO1359(I)/2025.
EFS yarn exclusion: what the council fears
PTC pointed out that the new demands run contrary to the understanding reached during earlier consultations, which was that no further exclusions would be sought. “Accepting these demands would cause serious and lasting harm to Pakistan’s value-added exports,” Anwar stated in the letter.
The council highlighted a global shift: textile and apparel demand has moved firmly towards man-made fibres. Citing Textile Exchange’s Materials Market Report 2025, the letter noted that synthetic fibres accounted for 69 per cent of global fibre production in 2024, while cotton’s share fell to 19 per cent.
Man-made fibre products account for about 63 per cent of global textile and apparel trade, but only about 12 per cent of Pakistan’s textile and apparel exports. Bangladesh, for example, is targeting an increase in the man-made fibre share of its apparel exports from about 24 per cent to 40 per cent by 2030.
Pakistan has almost no production of viscose or lyocell fibre, while its domestic polyester value chain carries cost and scale disadvantages against Chinese and ASEAN producers. Value-added exporters therefore rely on imported man-made fibre yarns and fabrics — many specified by international buyers — to secure and deliver orders.
Why the timing matters for exporters
PTC warned that the 2025 exclusions already force exporters to pay taxes upfront on those inputs, adding liquidity pressure and production costs. Extending the exclusions to all yarns and fabrics under Chapters 52 and 55 would raise input costs further and lock up working capital for apparel and made-ups exporters, restrict access to the fibres driving global demand, and weaken buyer confidence in Pakistan as a stable sourcing destination.
The warning lands at a difficult moment for the industry. Pakistan’s top 20 textile companies posted a combined Rs52 billion profit in FY26, but exporters are bracing for pressure ahead: the Pakistan Textile Exporters Association says textile exports could fall sharply in the second quarter of FY27, citing weak Western demand, shipping costs that have surged up to 2.5 times and high production expenses. Hosiery and knitwear exporters have also flagged rising costs that are eroding their competitiveness.
Three demands in the PTC letter
The council asked for the prime minister’s intervention on three points. First, the EFS should remain available for all legitimate export inputs, with no further exclusions of yarns or fabrics under Chapters 52 and 55.
Second, the FBR should strengthen enforcement through input-output coefficient audits, reconciliation of EFS imports against export documents, risk-based examination and strict penalties for offenders.
Third, the concerns of domestic suppliers should be addressed by restoring zero-rating on local supplies of inputs to EFS users, rather than by taxing imported inputs.
Textiles and apparel remain Pakistan’s largest export sector, and the council reaffirmed its commitment to working with the government to curb misuse while protecting the exporters who earn foreign exchange for the country. As textile millers target global brand expansion, access to the right inputs at the right cost will decide how far that ambition goes.
FAQ
What is the Export Facilitation Scheme?
The EFS lets exporters import inputs without paying duties and taxes upfront, keeping working capital free for production. It is considered central to Pakistan’s export competitiveness, especially for textiles.
What did the Pakistan Textile Council ask the PM?
To reject demands to exclude all yarns and fabrics under Customs Tariff Chapters 52 and 55 from the EFS, and to keep the scheme open for all legitimate export inputs.
Which inputs were already removed from the EFS?
Raw cotton, cotton yarn and grey cloth were removed from the scheme in 2025 through SRO1359(I)/2025, a step PTC says already added liquidity pressure on exporters.
