If Aptma’s claims are correct, a policy meant to support exports is instead distorting competition, weakening local mills and eroding tax revenues.
Pakistan’s textile lobby has warned that the Export Facilitation Scheme (EFS) is being systematically abused through the alleged misdeclaration of imported fabric. The All Pakistan Textile Mills Association says greige fabric, formally excluded from the scheme last year, is still entering duty- and tax-free under vague labels such as bleached, semi-processed or prepared-for-dyeing fabric.
What is happening: a loophole appears to have widened
Aptma points to a striking surge in imports of bleached cotton fabric under EFS. According to its figures, such imports rose to 1,911 tonnes in February 2026 from just 23 tonnes a year earlier—an increase of roughly 8,200%. To the industry, that is less a market shift than evidence of regulatory evasion.
The association says the issue was acknowledged in official discussions, yet the latest amendment to the scheme failed to include corrective measures.
Why it matters: policy distortion is becoming industrial damage
The problem is not merely customs fraud. Under EFS, imported inputs are exempt from sales tax, while locally produced goods supplied for export remain taxed. That gives allegedly misdeclared imports a clear price advantage over domestic fabric makers.
What must happen next: close the gap or invite deeper harm
Aptma wants more fabric categories removed from EFS and stricter port enforcement, including inspections and lab testing. The broader issue is simpler: an export-support scheme cannot remain credible if it rewards import arbitrage at the expense of domestic production.
