Textile exporters urge govt to address unresolved anomalies in budget

The leading associations from the value-added textile sector have called on the federal government to immediately address unresolved anomalies in the Federal Budget 2025–26, warning that continued inaction could disrupt exports and weaken investor confidence.

In a joint statement, both associations appreciated the formation of the Business Committee on Budget Anomalies by the Federal Board of Revenue (FBR) as a positive step toward institutionalized dialogue with the business community. They acknowledged the leadership of Chairman Ehsan Malik and other senior members of the committee representing various chambers, federations, and trade bodies, and commended the government for encouraging inclusive policy dialogue. However, they cautioned that the purpose of such consultative bodies would be entirely defeated if their recommendations are not given due consideration and implemented in a timely manner.

PHMA Chairman Abdul Hameed pointed out that Pakistan’s value-added apparel and textile sector contributes over $9 billion to national exports annually, supports millions of livelihoods, and remains a key pillar of the country’s economic stability. Yet, this sector is currently facing severe setbacks due to taxation measures introduced in the Federal Budget 2025–26 and Finance Act 2024, which replaced the simplified Final Tax Regime (FTR) with the more burdensome Normal Tax Regime (NTR). Under the NTR, exporters are now subject to a 1% minimum tax and an additional 1% advance tax on export proceeds, even before the finalization of their annual financial statements.

The statement also highlighted serious concerns regarding the amendments made to the Export Facilitation Scheme (EFS), particularly the removal of zero-rating on local procurement of input goods and the proposed imposition of sales tax at the import stage of cotton yarn. The associations stressed that these changes undermine the very objectives of EFS, which was introduced to simplify export procedures, reduce liquidity pressure, and promote digital traceability. They noted that Pakistan’s regional competitors like Bangladesh and Vietnam continue to provide tax-free access to raw materials for their export industries, giving them a clear advantage in global markets.

PHMA and PRGMEA leadership demanded the restoration of the original EFS framework introduced under SRO 957(I)/2021, which allowed zero-rated invoicing on local purchases and exempted key raw materials such as cotton yarn from sales tax at the import stage.