The Federal Board of Revenue has introduced product-specific customs duty refunds, with rates ranging from zero on certain yarns to 4.955% on eligible acrylic blankets, affecting exporters’ costs and cash recoveries.
Pakistan’s Federal Board of Revenue (FBR) has revised customs duty drawback rates for textiles, garments, hosiery, leather, engineering goods and other manufactured exports, effective October 27, 2026.
Four notifications—SROs 1908–1911(I)/2026—establish revised repayment rates for customs duties paid on imported raw materials used in export production. The textile notification replaces SRO 209(I)/2009.
Textile Refund Rates Vary by Product
Under SRO 1908(I)/2026, refunds are generally calculated as percentages of the free-on-board (FOB) export value.
For 100% cotton products, the prescribed rates include:
- Grey fabrics: 0.011%
- Dyed or printed fabrics: 0.450%
- Grey garments: 0.272%
- Bleached made-ups: 0.672%
For polyester-cotton blends, dyed or printed fabrics qualify for 0.693%, while similarly processed garments receive 0.937%.
Hosiery products qualify for 1.784%, while eligible waterproof cotton canvas, tarpaulins and tents receive 2.136%.
Certain acrylic blankets qualify for 4.955%, subject to composition and imported-material documentation requirements.
Refund Claims Subject to Deadlines
Exporters must submit claims to Customs within 210 days of exportation or 180 days after foreign-exchange realisation, supported by the prescribed Bank Credit Advice.
They must also declare the drawback claim in their export Goods Declaration and supporting documentation.
The refund applies to specified imported inputs and eligible exported products; it is not an additional subsidy on all exports.
Implications for Export Competitiveness
The revisions follow Pakistan’s broader tariff rationalisation programme, which has changed duties on industrial inputs.
For textile exporters, the commercial effect depends on whether the new product-specific refund rates adequately compensate for customs duties embedded in production costs.
Manufacturers should reassess export costing, product classification and drawback eligibility, particularly across different fibre compositions and processing stages.
The immediate priority is comparing revised rates with previous entitlements and ensuring timely claims. The longer-term test will be whether tariff reforms reduce exporters’ net input costs and improve competitiveness.
