ISLAMABAD: The Federal Government has reportedly imposed % sales tax on the import of cotton fiber, yarn, and greige cloth, after delay of nearly and month and continuous pressure from Pakistan Textile Mills Association (APTMA), highly reliable sources told Newzshewz.
On July 18, 2025, All Pakistan Textile Mills Association (APTMA) had urged Finance Minister Senator Muhammad Aurangzeb to immediately issue the Statutory Regulatory Order (SRO) for the imposition of 18% sales tax on the import of cotton fiber, yarn, and greige cloth, as committed in the Federal Budget 2025–26. However, it is unclear, if FBR has also issued necessary SRO or not as of today.
In a letter to the Finance Minister, APTMA Chairman Kamran Arshad drew attention to the government’s budget announcement that these imported items would be subject to 18% sales tax, while continuing to fall under the Export Facilitation Scheme (EFS). The sources said, this issue has recently been raised by textile millers with the Field Marshal, COAS General Syed Asim Munir.
” The Federal Cabinet has approved Finance Ministry’s summary through circulation to honour the commitment made with APTMA,” said the sources.
APTMA’s original request was for a complete exclusion of these items from the EFS, considering the damage caused to the domestic industry by unnecessary imports. However, during the budget presentation, a critical step was pledged to equalize the tax treatment of local and imported supplies for export purposes.
The Association, in its letter to Finance Minister had pointed out that a substantial time has passed since the budget speech, and over three weeks since its approval. As per the decision of the Deputy Prime Minister’s Committee, the sales tax was to be imposed from July 15.
APTMA had noted that the delay coincides with the arrival of the new domestic cotton crop, which is currently facing a lack of buyers due to continued uncertainty. The tax disparity, the Association stated, has eroded demand for locally grown cotton and domestically manufactured yarn and greige cloth.
APTMA argued that given the absence of a level playing field, both traders and mills are hesitant to off-take the new crop. The textile sector — which accounts for more than half of Pakistan’s total exports and showed robust performance with a $1.5 billion increase in FY 2024–25 — saw an equivalent rise of $1.5 to $2 billion in imports, resulting in a net negative impact on the balance of payments. Ends
