PESHAWAR -UNS: Chairman of the Khyber Pakhtunkhwa Textile Mills Association (KPTMA),Sikandar Kuli Khan Khattak, has raised grave concerns over the alarming surge in yarn imports under the Export Facilitation Scheme (EFS), warning that it poses a serious threat to the survival of the domestic spinning industry, especially in Khyber Pakhtunkhwa.
Khattak highlighted that yarn imports under the EFS have skyrocketed by an astonishing 350%, with imports of both Cotton and MMF yarn increasing from 7,800 metric tons in January 2024 to 28,306 metric tons in February 2025. This surge now accounts for over 30% of the total production of the domestic spinning industry. The repercussions are severe, as more than 40% of spinning mills have been forced to shut down, with many others scaling back operations due to the flood of cheaper imported yarn into the market.
The impact is particularly dire for mills in Khyber Pakhtunkhwa, a landlocked province that faces significant logistical and cost challenges. Local mills are now struggling with severe liquidity issues, exacerbated by the increased competition from subsidized imports. Many mills have been compelled to reduce their production by up to 40%, putting their financial stability and ability to meet obligations at significant risk.
Khattak further criticized the misuse of the EFS, which was originally designed to facilitate the export of textile products. A significant portion of the yarn imported under the scheme, intended for export use, is being diverted to the domestic market. This misuse not only harms local yarn manufacturers but also enables certain unscrupulous businesses to evade sales tax and customs duties, resulting in millions of rupees in lost government revenue. Consequently, the domestic industry is suffering, and thousands of textile workers are losing their jobs and livelihoods.
In addition to the economic impact, the influx of cheaper imported yarn is degrading the quality of local textiles. As mills are forced to buy inferior yarn to stay competitive on price, the overall quality of domestically produced goods is declining. This compromises the reputation of local mills both in the domestic and international markets, leading to a further loss of market share.
Khattak urged the government to take immediate action to address these critical issues, including restoring the EFS to its pre-Finance Act 2024 form, which includes the sales tax exemption/zero-rating on all local supplies used for export manufacturing. This would ensure a level playing field for the domestic spinning industry and help mitigate the negative effects of increased yarn imports.
Khattak emphasized that protecting the domestic industry is vital not only for preserving jobs and livelihoods but also for safeguarding the country’s economic stability. Strengthening the local textile sector would help reduce reliance on imported yarn, strengthen the trade balance, alleviate pressure on foreign exchange reserves, and encourage innovation in technology and sustainability.
The KPTMA Chairman concluded by calling for stricter enforcement of the EFS and stronger checks and balances to prevent misuse. By addressing these issues, the government can protect the domestic textile industry, safeguard jobs, and contribute to the long-term economic health of Pakistan.
