The All Pakistan Textile Mills Association (APTMA) has credited the federal government and the Federal Board of Revenue (FBR) with improving Pakistan’s net textile exports by approximately $1 billion during the fiscal year 2026 following reforms to the Export Facilitation Scheme (EFS). The association congratulated Prime Minister Shehbaz Sharif, Deputy Prime Minister Ishaq Dar, Finance Minister Muhammad Aurangzeb, Commerce Minister Jam Kamal Khan, Planning Minister Ahsan Iqbal and other government officials on the reported improvement. According to APTMA, changes to the scheme, combined with stronger monitoring and enforcement, helped reduce reliance on imported textile inputs and encourage domestic value addition. Net textile exports increased from $10.55 billion in FY2025 to $11.48 billion in FY2026, while gross textile exports remained broadly stable at around $17.9 billion.
The improvement was driven primarily by a decline in textile imports rather than a substantial increase in gross exports. Pakistan’s textile imports fell from $7.36 billion in FY2025 to $6.46 billion in FY2026, representing a reduction of approximately $900 million. Over the same period, gross textile exports edged up from $17.89 billion to $17.93 billion. The resulting increase in net textile exports, calculated by subtracting imports from exports, reached approximately $930 million. APTMA said the development strengthened the sector’s net foreign exchange contribution and demonstrated the importance of reducing unnecessary import dependence while maintaining export performance. The association also noted that the sector sustained its gross export levels despite weak demand in major international markets, difficult global trading conditions and high domestic production costs.
A major factor behind the decline in imports was the reduction in purchases of raw cotton and cotton yarn from international markets. Both categories were excluded from the Export Facilitation Scheme in August 2025. Cotton yarn imports declined by 40.17%, falling from $754.74 million in FY2025 to $451.55 million in FY2026. Import volumes dropped by 47.05%, from 220,548 tonnes to 116,769 tonnes. Raw cotton imports also declined by 43.28%, decreasing from $2.69 billion to $1.53 billion. APTMA linked the lower dependence on imported cotton with efforts to revive domestic sourcing. Cotton arrivals increased by 7.53%, rising from 3.796 million bales as of October 15, 2025, to 4.081 million bales on the same date in 2026, despite a 12.6% decline in cotton acreage. These figures suggest that domestic supply conditions and changes in import arrangements played an important role in the reduction of textile input imports.
However, APTMA highlighted tax differences between imported and locally manufactured textile inputs as a continuing concern for the industry. Under the existing EFS arrangements described by the association, imported inputs receive exemptions from customs duty and sales tax, while locally manufactured inputs are subject to 18% sales tax. This difference can provide imported materials with a cost and cash-flow advantage over domestic supplies, particularly affecting upstream industries such as spinning and weaving. The association also warned that duty- and tax-free imports may be vulnerable to misdeclaration or diversion into the domestic market if monitoring is inadequate, potentially reducing government revenue and harming local manufacturers. APTMA said stronger enforcement of the scheme and more effective checks on the use of imported inputs were necessary to protect domestic production while ensuring genuine exporters continued to receive facilitation.
The association emphasised that Pakistan has an integrated textile value chain covering cotton cultivation, ginning, spinning, weaving, processing, garments and home textiles. It described this industrial network as an important national asset that can support domestic employment, manufacturing activity and export earnings. However, high energy tariffs, taxation and financing costs continue to put pressure on local producers. APTMA argued that export policies should support the entire value chain rather than favouring finished-product exporters at the expense of manufacturers supplying yarn and fabric. It called on the government to ensure equal tax treatment for locally sourced and imported textile inputs under the EFS, while retaining strong monitoring measures to prevent misuse of exemptions. The association said fairer treatment could encourage exporters to purchase more inputs from domestic manufacturers and help strengthen local industrial activity.
APTMA expressed hope that the government’s ongoing review of the Export Facilitation Scheme would build on the improvement recorded in FY2026 by addressing tax disparities and encouraging domestic sourcing. The association argued that export performance should be measured not only through gross export receipts but also through the net foreign exchange earned after accounting for imported inputs. Pakistan’s textile sector remains a major part of the country’s export-oriented industrial base, making the balance between imported materials and domestic production an important policy consideration. Maintaining gross exports while reducing avoidable imports could improve net foreign exchange earnings, provided local manufacturers remain competitive and exporters can meet international quality, pricing and delivery requirements. The outcome of the EFS review will therefore be important for determining whether the recent gains can be sustained while supporting a stronger domestic textile value chain.
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