ISLAMABAD: Textile players have warned the government that any proposed changes to the Export Facilitation Scheme (EFS), particularly imposing a sales tax on imported yarn for the value-added industry, could severely harm the country’s export growth.

Exporters in the value-added sector have raised concerns at a time when the government is considering various proposals to modify the existing EFS. Local spinners are urging the government to impose a sales tax on imported yarn.

In a statement on Tuesday, the Pakistan Textile Exporters Association (PTEA) highlighted that, with government support, the textile industry has entered a phase of export-led growth. Any disruption at this critical time could significantly impact the pace of growth, it emphasised.

PTEA Patron-in-Chief Khurram Mukhtar said that the textile sector was in a severe crisis, and the industrial production was lower than the built-up manufacturing capacity. Due to this underutilisation, the country was not fetching the full potential of foreign exchange earnings.

After achieving a landmark milestone of $19.3bn in FY22, textile exports dropped to $16.6bn in FY24, witnessing a drop of 13.83pc. He explained that several factors, including inconsistent policies, the highest production cost, exchange rate issues and economic meltdown, have contributed to the deteriorating exports.

Published in Dawn, January 22nd, 2025