The All Pakistan Textile Mills Association (APTMA) has called on the government to grant direct import rights for liquefied natural gas (LNG) and allow procurement of 35% of newly discovered domestic gas through competitive bidding under third-party access.
According to media reports, the association made these demands during a presentation to Finance Minister Muhammad Aurangzeb, highlighting key challenges faced by the textile sector, including rising production costs, declining competitiveness, and a growing reliance on imported raw materials.
APTMA reported that textile exports grew by 8.6% in 2024, reaching $17.45 billion from $16.07 billion in 2023, but still falling short of the pre-crisis level of $18.67 billion recorded in 2022. However, the sector is witnessing a surge in imports of raw materials such as cotton, yarn, and cloth, as local sales have declined due to tax disparities between domestically produced and imported inputs. The association warned that the net foreign exchange earnings of the textile sector could have been $1.5 billion to $2 billion higher if local industries were not disadvantaged.
APTMA urged the government to remove the 1% advance tax on export proceeds to eliminate dual taxation and provide a predictable tax regime for exporters. It also sought the immediate clearance of outstanding industry dues. The Finance Act 2024 had withdrawn zero-rating and sales tax exemptions on local supplies under the Export Facilitation Scheme (EFS), while keeping imports duty-free. This move, the association argued, has placed domestically produced inputs at a disadvantage, as exporters face refund delays exceeding six months, with only 70% of their claims processed while the remaining 30% remain indefinitely deferred.
As a result, textile manufacturers are shifting toward imports, with yarn imports rising from 8 million kilograms in January 2024 to 32 million kilograms in January 2025. Greige cotton cloth imports increased from 2 million kilograms to 5 million kilograms in the same period. Yarn imports are projected to triple in FY25 to 300 million kilograms, amounting to $900 million. Meanwhile, more than 100 spinning mills, accounting for 40% of production capacity, have shut down, leaving thousands unemployed. The crisis also threatens the broader cotton economy, which contributes $2-3 billion annually to rural incomes.
APTMA proposed restoring the EFS to its June 2024 status by reinstating zero-rating on local inputs or subjecting EFS imports to the same sales tax regime as domestic production. It suggested implementing a graduated sales tax system, similar to India’s, where lower tax rates are applied to raw materials to encourage local manufacturing and reduce tax evasion.
Energy costs remain a major concern, as power and gas prices in Pakistan are significantly higher than in competing economies. Industrial power tariffs currently range between 12-14 cents per kilowatt-hour (kWh), compared to 5-9 cents in competing countries. Gas prices for captive power plants have surged from Rs1,100 per million British thermal units (MMBtu) to Rs3,500/MMBtu over the past two years, rendering gas-fired captive power generation more expensive than grid electricity at over 14 cents/kWh.
APTMA emphasized the need for internationally competitive energy prices of 9 cents/kWh for electricity and $9/MMBtu for gas to restore industrial viability. It rejected the proposed “grid transition levy” of 5-20% on captive power generation, arguing that industries continue using gas-fired captive plants due to the unreliable grid supply. The association warned that many businesses are shifting to furnace oil and coal-fired generation, which increases production costs and carbon emissions, making Pakistan’s exports vulnerable to international environmental regulations such as the European Union’s Carbon Border Adjustment Mechanism (CBAM).
APTMA called for market liberalization by allowing industries to directly import LNG and purchase 35% of new domestic gas discoveries through competitive bidding. The association insisted that these supplies should be exempt from levies, cross-subsidies, and inefficiencies such as unaccounted-for gas (UFG) losses. It also urged the government to reduce industrial power tariffs to 9 cents/kWh and eliminate the Rs100 billion cross-subsidy burden placed on industrial consumers.
To further support the sector, APTMA proposed permitting business-to-business (B2B) electricity contracts with reasonable wheeling charges. It recommended capping wheeling charges at Rs5/kWh based on cost-of-service calculations, excluding legacy grid costs unrelated to B2B consumers. Enabling textile manufacturers to source clean, competitively priced electricity through private contracts, the association argued, is crucial for compliance with evolving global environmental standards and Pakistan’s net-zero commitments.
APTMA reiterated that without these urgent policy interventions, Pakistan’s textile sector will continue to lose its competitive edge, leading to further de-industrialization, job losses, and declining foreign exchange earnings.
