EFS withdrawal causes closure of 800 ginning, 120 spinning mills: Aptma

ISLAMABAD: All Pakistan Textile Mills Association (Aptma) Chairman Kamran Arshad said on Friday that over 120 spinning mills have shut down due to the withdrawal of Export Facilitation Scheme (EFS) from the domestic value chain of textile industry, and many others are operating below 50 per cent utilisation, teetering on the edge of closure.

“Thousands of jobs have been lost. Similar trends are observed in the weaving sector, and the disruption will soon spill over further downstream, and destabilise the entire textile value chain.”

He said this while addressing a press conference, flanked by Chairman Pakistan Cotton Ginning Association Dr Jassu Mal, and former chairman PCGA Sohail Harral.

“Since the spinning sector is the main consumer of cotton, its decline will also wipe out Pakistan’s cotton economy. Amid falling demand and no support price, cotton farmers are rapidly shifting to water-intensive alternatives. The viability of local cotton is further undermined by the EFS sales tax disparities, while cotton production is at a historic low of 5 million bales and is expected to decline further,” the Aptma chairman said.

He urged the government to immediately address the sales tax disparity between local and imported supplies for exports and create a level playing field for the industry.

“The first best solution is to restore the Export Facilitation Scheme (EFS) to the June 2024 position with zero-rating on local supplies for exports. However, the International Monetary Fund (IMF) did not agree to this despite repeated efforts on the part of the industry and the government,” he said.

“Under this scenario, the only viable alternative is to implement a negative list of high-risk imports under EFS, which includes all yarn and cloth. It will ensure level playing field,” he added.