ISLAMABAD: The Federal Board of Revenue (FBR) has officially imposed an 18% sales tax on imported raw cotton, yarn, and grey cloth. The tax, long demanded by the All Pakistan Textile Mills Association (APTMA), comes nearly a month after its inclusion in the federal budget for 2025–26.
The delay in issuing SRO 1359(I)/2025 created major concerns among domestic producers and traders. Although the measure was approved by the cabinet weeks earlier, it wasn’t formally notified until Tuesday. This gap caused uncertainty in cotton buying, affecting both ginners and mills at the start of the new crop season.
The SRO removes these imports from the Export Facilitation Scheme but exempts consignments shipped within 10 days before the notification. APTMA says this exemption is too narrow and doesn’t fully ease market disruption. Traders delayed purchases, fearing retroactive taxation or unclear pricing.
APTMA Chairman Kamran Arshad, in a letter to Finance Minister Muhammad Aurangzeb, urged immediate implementation. He argued that tax parity between imported and local inputs is essential to avoid undermining Pakistan’s cotton sector. The association said the delay discouraged domestic demand and sent mixed signals to investors.
Although textile exports rose by $1.5 billion in FY2024–25, the gains were canceled out by a $1.5–2 billion rise in imports. APTMA warns that such imbalances will persist unless tax policies are enforced without delay or confusion. The textile sector accounts for over 50% of Pakistan’s total exports and remains a key driver of the economy.