Textile exporters sound alarm over tax, energy policies
Pakistan's leading garment and textile exporters have sounded alarm over the government's policies that they fear will cripple the vital export sectors, which will in turn lose a crucial opportunity to capture a larger pie of the global market.
The Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) has vehemently opposed any move to impose 18% sales tax on exporters operating under the Export Facilitation Scheme (EFS). It warned that such a regressive tax measure would paralyse the garment export sector, stifle the essential cash flow and derail the chance for Pakistan to increase its presence in the global apparel market.
The association expressed concern over what it described as a deliberate campaign by vested interests within the textile sector to weaken the country's most dynamic and value-added industry.
PRGMEA Regional Chairman Dr Ayyazuddin stated that the EFS was not a luxury but a necessity for export-led growth, adding that the garment industry, being entirely export-oriented and positioned at the end of textile value chain, was already bearing the brunt of delayed refunds and multiple taxes.
"Exporters pay sales tax upfront and wait for months to receive refunds; they often face a three-month delay, which severely hampers their cash flow and operational capacity," Ayyazuddin elaborated.
He stressed that the imposition of additional taxes would prove disastrous as the garment industry was playing a critical role as Pakistan's biggest source of employment and foreign exchange, particularly at a time when global trade shifts were offering new opportunities.
He warned that any restriction or levy on imported inputs, which are essential as 79% of the global textile market uses synthetic filament yarn, would push international buyers to divert orders to Pakistan's competitors like Bangladesh, Vietnam or Cambodia.
Simultaneously, the Pakistan Hosiery Manufacturers Association (PHMA) called on the government to abolish the outdated peak and off-peak electricity tariff structure.
In a letter sent to top government officials, the PHMA highlighted that the peak-hour surcharge policy was introduced to curb consumption during critical power shortages. However, the energy scenario has changed significantly, with Pakistan now having a surplus generation capacity and even exploring electricity exports.
Under such circumstances, the PHMA argued, the rationale for maintaining peak and off-peak tariff differential has completely vanished.
PHMA Zonal Chairman Abdul Hameed noted that exporters in the hosiery and textile sector, operating 24/7 to meet global deadlines, were struggling with competitiveness challenges due to high electricity charges during peak hours. Fluctuating tariffs force industries to change production schedules, reducing efficiency and increasing overall costs, which weakens Pakistan's position internationally.
Hameed emphasised that the surplus power situation presents a clear opportunity for reform.
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