To address the sharp rise in yarn imports impacting the domestic textile industry, All Pakistan Textile Mills Association (APTMA) has urged the government to either restore zero-rating of local supplies under the Export Facilitation Scheme (EFS) or implement a uniform sales tax regime for imported yarn.

Highlighting the disparity in the current system, APTMA says, local suppliers face an 18 per cent sales tax on exports, while imported yarn is exempt. This imbalance has led to the shutdown of nearly 40 per cent of spinning units, while the remaining operate below 50 per cent capacity. This not only leads to loss of significant number of jobs but also millions of dollars due to increased imports. It also puts investments worth billions of dollars at risk, the association adds.

In January 2025, Pakistan imported a record 32 million kg of yarn. This was a result of an unfair sales tax structure favoring imports over locally produced yarn. Yarn imports by the country are likely to triple to 289,42 million kg in FY25 as against 107.64 million kg in FY24.

According to APTMA, the decline of the spinning sector also hinders domestic value addition in exports by Pakistan, negatively impacting the entire textile industry. Furthermore, the reduced demand for Pakistani cotton due to the import surge creates a crisis for cotton farmers, it adds.

To counter this, the government needs to introduce fair policies to maintain employment, improve balance of payments and reduce dependence on foreign loans, emphasizes APTMA.