The Pakistan Hosiery Manufacturers & Exporters Association (PHMA) has urged the government to restore the original Export Facilitation Scheme (EFS) framework introduced through SRO 957(I)/2021. The association has expressed concerns over subsequent amendments, particularly the withdrawal of zero-rating on eligible local supplies through SRO 1281(I)/2024 and the exclusion of raw cotton, cotton yarn and grey fabric under SRO 1435(I)/2025. According to the industry, these changes have increased production costs and weakened the financial position of export-oriented businesses.
A major concern relates to the 18% sales tax payable on taxable local purchases, compared with the duty-and-tax relief available on qualifying imported inputs under EFS. Although input tax may be refundable subject to applicable conditions, exporters have highlighted delays in receiving refunds, resulting in substantial working capital requirements. The association noted that production and shipment cycles can extend to approximately 180 days, with refund delays potentially prolonging the period during which business funds remain unavailable.
PHMA has called for restoration of zero-rating on eligible local supplies, reconsideration of excluded textile inputs and timely processing of sales tax refunds. It has also supported targeted enforcement against misuse rather than broad restrictions affecting compliant exporters. The central policy question is whether export facilitation measures can achieve their intended objectives when tax-related cash flow pressures increase the cost of doing business. For exporters, the distinction between eventual tax recovery and immediate cash availability remains commercially significant.