The All Pakistan Textile Mills Association (APTMA) has commended the Pakistani federal government's decision to impose an 18 per cent sales tax on imported cotton yarn, a move they say creates a level playing field for the local industry.

Kamran Arshad, Chairman, APTMA issued a press statement regarding the federal budget, highlighting that the government has addressed inconsistencies within the Export Facilitation Scheme (EFS). Arshad specifically called for the complete elimination of any remaining loopholes in the EFS.

He explained that previously, imported raw materials were tax-exempt, while local raw materials faced an 18 per cent sales tax. This discrepancy created significant issues in the local and imported value chains under the EFS. Zero percent sales tax on imported raw materials for exports, contrasted with an 18 per cent sales tax on locally purchased raw materials for the same purpose, had severely impacted the weaving sector, Arshad pointed out.

APTMA is advocating for an 18 per cent sales tax to be applied across the entire value chain of yarn and fabrics.

In a push for further protection of the domestic industry, Arshad urged the government to include cotton yarn and fabric in the negative list, which restricts or prohibits their import. The APTMA has also requested a 5 per cent customs duty on yarn and an 11 per cent duty on fabrics.

Arshad noted, local polycotton and polyester have become 35 per cent more expensive. Additionally, APTMA is demanding the abolition of the 18 per cent sales tax on cotton seed and cotton cake.