Daily Times

The All Pakistan Textile Mills Association (APTMA) on Tuesday expressed serious concerns over the deteriorating state of the textile industry, attributing the shutdown of 100 textile units nationwide to flawed government policies.

APTMA Chairman Kamran Arshad, in a statement, revealed that textile production has dropped by 40 percent, while exporters are grappling with severe cash flow issues due to excessive taxation. He noted that the Federal Board of Revenue (FBR) has withheld Rs. 182 billion in sales tax refunds, exacerbating the sector’s financial struggles.

Arshad also criticized the FBR’s decision to discontinue its Faster system for tax refunds, which has further worsened liquidity challenges for exporters.

He highlighted the soaring operational costs faced by the industry, pointing out that electricity is being supplied at 12 cents per unit, while gas tariffs have surged from Rs. 1,100 to Rs. 3,500 per MMBTU in just two years.

Additionally, he condemned the heavy tax burden on the sector, which includes a 5 percent levy, corporate income tax on textile exporters at standard rates, a 10 percent super tax, and a 1.25 percent advance tax on textile exports. This excessive taxation has led to double taxation, resulting in a staggering 135 percent overall tax burden on exporters, making local manufacturing uncompetitive due to high energy and production costs.

Arshad called for urgent policy reforms, urging the government to eliminate the sales tax disparity between local and imported industries. He also demanded the restoration of the Export Facilitation Scheme to its 2024 framework and the reintroduction of sales tax exemptions for local supplies to exporters.

Furthermore, he emphasized the need to reinstate zero-rating for export sectors and restore sales tax exemptions across the entire textile value chain.

With the textile sector being Pakistan’s largest export contributor, APTMA warned that without immediate government intervention and policy adjustments, the industry will face further decline, leading to more closures and widespread job losses.