Commerce Minister Jam Muhammad Kamal informed the National Assembly that the government is preparing a new textile policy expected to include a proposal to exempt the current 11% sales tax on domestic cotton production.
The policy, which is anticipated to be unveiled in the coming months, aims to support the textile sector and enhance its competitiveness.
In a separate reply, Parliamentary Secretary for Commerce Zulfiqar Ali Khan confirmed the sales tax exemption is under consideration as part of broader efforts to boost exports of value-added goods, which have grown by 35% over the past five years.
The minister also addressed concerns regarding the recent US imposition of a 30% reciprocal tariff on imports from Pakistan, which is currently suspended for 90 days. While exporters generally view the tariff as a challenge, some see potential opportunities arising from higher tariffs imposed on Pakistan’s competitors in the US market.
To navigate these challenges, the prime minister has constituted a Steering Committee and a working group tasked with conducting an in-depth analysis and formulating policy responses to the US reciprocal tariffs. The Ministry of Commerce is coordinating with various ministries, departments, exporters, and stakeholders to devise a strategy for engaging with US authorities.
During fiscal year 2023-24, Pakistan’s exports to the US stood at $5.3 billion, with imports at $2.2 billion, resulting in a trade surplus of $3.1 billion. In the current fiscal year through March 2025, exports reached $4.4 billion while imports totaled $1.9 billion, maintaining a trade surplus of $2.5 billion. Major Pakistani exports to the US include garments, medical instruments, and PET-bottle grade products, while key imports from the US consist of cotton, iron and steel scrap, computers, petroleum products, soybeans, and almonds.
The government is actively working to support exporters amid the changing trade landscape, while the new textile policy is expected to provide relief to the cotton sector through tax reforms.
