ISLAMABAD: Pakistan’s top exporters are urging the government to reconsider amendments to the Export Facilitation Scheme (EFS), warning of trade disruptions and rising compliance costs.
The cabinet’s move to slash the input utilisation period from 60 months to nine months has sparked industry concerns over supply chain stability. In response, the government has formed a committee, led by the planning minister, to review the changes. The panel, which includes key ministers, tax officials and industry representatives, will meet on Friday and assess whether the amendments favour imports over local suppliers and their broader impact on manufacturing and exports.
When The News asked a senior official familiar with the issue and inter-ministerial discussions about the impact of reduced utilisation period on exporters, he said they previously imported raw materials in bulk and used them gradually over five years, benefiting from economies of scale and lower import costs. With the new nine-month limit, they will no longer be able to import in large quantities. Furthermore, if they do and fail to use the materials within the timeframe, they will face penalties. The Federal Board of Revenue (FBR) and Commerce Ministry remain divided over the proposal. FBR argues the scheme undermines tax collection, while the Commerce Ministry says tighter oversight shouldn’t penalise compliant exporters. Officials note that irregularities exist in less than 1 percent of EFS cases, questioning the need for sweeping changes.
The Pakistan Textile Council (PTC) has called for revising key provisions, including restoring the 30-day processing timeline for approvals, increasing provisional input access to 50 per cent, and maintaining the 30-day monitoring period. It also opposes the cap on B-grade goods at 5 percent, the removal of carry-forward provision for unused inputs, and a drastic reduction in input utilisation periods. Exporters warned that excessive restrictions could erode competitiveness. They are pushing for urgent consultations to ensure the EFS remains a driver of export growth rather than a regulatory burden.
The textile industry has also urged the government to restore the Export Facilitation Scheme (EFS) to its June 2024 form, seeking to procure 35 percent gas from new domestic gas discoveries at the auctioned price. It also asked the government to reinstate zero rating on local supplies for exports.
The All Pakistan Textile Mills Association’s demands were placed in a meeting with Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb. The meeting was attended by senior officials, including Chairman of the Federal Board of Revenue (FBR), Secretary of the Commerce Division, and other senior officers from the Finance Division and FBR. In the meeting, APTMA also asked the government functionaries to permit exporters to directly import LNG, saying it can import and transport its LNG through 3rd party access at ex-delivery price of $9/MMBtu. However, it said that there must be no levy, taxes, cross subsidies or other domestic inefficiencies like excessive un-accounted for gas (UFG) rates in the RLNG prices. “The textile industry wants supply of RLNG at full cost without cross-subsidies and other extraneous costs (excessive UFG, etc).”
APTMA also asked the government to reduce industrial power tariff to 9 cents/kWh for all electricity supplied and remove Rs100 bn cross subsidy from industrial power tariffs, a senior official who was part of the meeting told The News.
“In the meeting it also mentioned that incremental tariff of 8-9 cents/kWh will not lead to industrial recovery or growth in exports or power consumption since industry is currently at 60pc of historical consumption and realizing incremental gains requires increasing to 100pc and beyond that is neither feasible nor foreseeable. APTMA also asked for B2B power contracts with reasonable wheeling charge at Rs5/kWh cost-of-service, excluding legacy costs of the grid unrelated to B2B consumers.”
Earlier, Senator Aurangzeb and his team welcomed the APTMA office-bearers and expressed the government’s strong commitment to providing all possible support to the textile sector. The finance minister assured the delegation that the government recognizes the critical role of textile industry in Pakistan’s economy and remains dedicated to addressing its concerns. He emphasized that addressing the core challenges faced by the industry is key to creating a conducive environment for industrial development, fostering economic stability and supporting the nation’s overall growth trajectory.
The APTMA delegation, led by Chairman Kamran Arshad, provided a detailed presentation on several pressing issues facing the textile sector related to energy, taxation and financing. The presentation also touched on various recommendations and proposals for the long-term viability and growth of the sector.
The finance minister assured the APTMA leadership that the government would give a thorough and thoughtful analysis to their recommendations, incorporating viable suggestions into the federal budget. He reiterated the importance of consultative process and emphasised that any anomalies in the current framework would be addressed.
The APTMA delegation expressed their appreciation on expedited disbursement of tax refunds and requested further support for the clearance of outstanding dues.