Business Recorder
ISLAMABAD: Khurram Mukhtar, Patron-in-Chief, Pakistan Textile Exporters Association (PTEA) has said Pakistan’s export sector and the entire textile value chain are unfortunately fighting against a certain mindset that appears bent upon penalising the very ecosystem that earns foreign exchange, creates jobs and sustains documented economic activity. “The harsh reality today is that the more exporters grow, the more they are burdened. In many cases, the more you export, the more you lose,” he said. Mukhtar said that exporters are the driving force of the entire textile chain. From cotton growers, ginners, spinners, weavers, knitters, and processors and garment manufacturers to home textile exporters and finished product manufacturers, the entire chain ultimately survives and grows through exports. If exports slow down, the impact cascades across the entire economy, affecting farmers, labours, transporters, ancillary industries and millions of livelihoods connected directly and indirectly with the sector, he said. The government’s own documented figures reveal that the shift from the Final Tax Regime (FTR) to the Normal Tax Regime (NTR) has resulted in an estimated additional revenue extraction of approximately PKR 90 billion. Exporters alone have paid nearly PKR 200 billion in excess on account of advance income tax during FY25 and FY26, he said. PTEA Pattern in Chief further stated that the entire textile chain, after extensive deliberations and consensus-building among all stakeholders, jointly proposed that exporters should have the option to remain under FTR or voluntarily opt for NTR. This was perhaps one of the rare moments in Pakistan’s history where the entire textile chain converged upon one concrete and balanced proposal. Unfortunately, even this unified recommendation does not appear to be receiving serious consideration, he said. At the same time, the entire export framework is structured in a manner where exporters’ liquidity remains perpetually trapped in the refund regime. Pakistan already has one of the highest levels of capital blockage in refunds within the region. Exporters are forced to finance their own legitimate refunds through expensive bank borrowing, resulting in an enormous financial cost running into hundreds of billions of rupees, he said. On one hand, Cash in Circulation (CIC) continues to rise, systematically incentivising the undocumented economy, while on the other hand, compliant and documented businesses continue to face increasing taxation, regulatory burden and liquidity stress. Export-led growth has increasingly become mere rhetoric rather than an actionable national priority, he continued. The Export Facilitation Scheme (EFS) was one of the few excellent reforms introduced in recent years. It was fully digitalised and brought transparency and efficiency into the system. However, the exclusion of domestic commerce from EFS significantly increased the burden on exporters and disrupted the integrated textile value chain, he said. More surprisingly, even cotton remains excluded from EFS despite the fact that Pakistan’s domestic cotton production is insufficient to cater to the annual consumption requirements of the textile industry. Decisions are being made in isolation rather than by viewing the textile chain as one integrated ecosystem. A simple numerical assessment of the sector’s liquidity flows, taxation burden, energy costs and refund blockages clearly explains why Pakistan has struggled to achieve sustained export growth despite possessing surplus industrial capacity and established global market access, he said. “The unfortunate reality is that everyone knows the illness, yet the cure remains unavailable. We continue to operate through ad-hocism, short-termism and misplaced priorities instead of adopting a strategic long-term export-led growth model,” he maintained. The export sector has consistently proposed constructive and evidence-based reforms. We have repeatedly stressed that super tax should be abolished in a phased manner along with Minimum Turnover Tax (MTR), inter-company dividend taxation and taxation on bonus shares, particularly when bonus shares are a non-cash item and do not represent actual income generation, he continued. Similarly, we have proposed a progressive GST framework aimed at unlocking industrial liquidity and reducing cascading effects within the value chain. Under this proposal, raw materials may be taxed at 5 percent, fabrics at 10 percent and finished products at the standard GST rate, thereby ensuring that the primary revenue collection takes place at the finished product stage instead of trapping capital throughout the manufacturing chain, he said, adding such measures can substantially improve liquidity, documentation and competitiveness. Unfortunately, despite extensive engagement, there appears to be little willingness to consider structural solutions. Exports are a federal subject, yet provincial governments are further burdening the export sector through additional levies, duties and costs, leaving no stone unturned to make Pakistani exports less competitive globally. Simultaneously, there is still no meaningful roadmap visible for reducing industrial energy costs to regionally competitive levels, he regretted. The few documented and compliant businesses left in the country are effectively carrying the burden of inefficiencies, leakages and social obligations of the entire system. In many cases, exporters are even providing transportation and logistics support to their workforce, responsibilities that ordinarily fall within the domain of the state. These inefficiencies continue accumulating within the cost structure, yet Pakistan expects its exporters to compete globally against highly efficient economies. We simply cannot export inefficiencies to international markets, said Mukhtar. The overall picture presents a serious dilemma for Pakistan. The world is actively moving towards supply chain diversification, and Pakistan possesses surplus industrial capacities, entrepreneurial capability and established global retailer relationships. The textile sector alone has the potential to increase exports by an additional USD4–5 billion within a short period, provided a supportive ecosystem is created. Such growth can create millions of direct and indirect jobs, improve industrial utilisation, generate substantial tax revenues through economic expansion and strengthen Pakistan’s external account, he said. The opportunity is historic, but so is the risk of missing it entirely due to policy inertia, ad-hocism and failure to understand the integrated nature of the textile ecosystem. The time to act is now. The question is: who will demonstrate the vision, courage and seriousness required to change the direction, he concluded. Copyright Business Recorder, 2026
Go to News Site