The Pakistan Textile Council (PTC), a not-for-profit research and advocacy platform, has voiced concerns over the proposed amendments to the Export Facilitation Scheme (EFS) introduced by the Federal Board of Revenue (FBR).
The textile council, in a letter addressed to Secretary Export Policy (FBR), highlighted that any modifications that fail to safeguard the interests of the industry could negatively impact Pakistan’s exports.
“The EFS, introduced in 2021, has played a crucial role in enhancing the competitiveness of the textile sector by simplifying processes and ensuring smooth export operations,” read a statement.
“However, the proposed amendments outlined in S.R.O. 204 (1)/2025, if implemented without due consideration, may create operational inefficiencies and burden exporters with unnecessary compliance requirements,” it said.
PTC said that amendments must be targeted and focused on increasing efficiency rather than disrupting established processes.
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“One of the key concerns raised by PTC pertains to the processing timeline for determining production capacity and input-output ratios,” read the statement.
Under the proposed amendments, the Input Output Coefficient Organization (IOCO) will have 60 days to process applications, with exporters allowed only a provisional acquisition of 25% of their declared input goods.
“This extended timeframe creates significant uncertainty for manufacturers operating under strict schedules,” PTC said as it recommended reducing the processing time to 30 days and increasing provisional approval to 50%.
“Another pressing issue is the proposed extension of monitoring timelines for pending cases under the Chief Collector (Exports & IOCO) to 60 days, which could further slowdown approvals and disrupt supply chains.”
PTC called for maintaining the 30-day timeline to strike a balance between regulatory oversight and operational efficiency, allowing exporters to fulfill commitments without unnecessary bottlenecks.
Moreover, PTC also expressed concerns over amendments requiring annual authorization of input goods based on IOCO assessments.
PTC noted that the amendment would make future authorizations contingent upon the Regulatory Collector’s discretion.
“This measure introduces uncertainty and potential bureaucratic obstacles. Instead, PTC suggests an automatic authorization process upon submission of reconciliation statements, with any discrepancies addressed through audits, thereby reducing unnecessary delays while maintaining compliance.
It highlighted that the proposed reduction in the input utilization period from 60 months to 09 months is an impractical change that could lead to frequent procurement disruptions and increased costs for exporters.
“PTC strongly recommends that the utilization period must be at least 24 months with an additional 06-month extension granted by the regulatory authority, while further extensions should require FBR committee approval as recommended by FBR.
“This would ensure more predictable and stable production cycles,” it said.
The council further highlighted that the textile industry is also concerned about the proposed limitation on B-grade or rejected goods, which would restrict their proportion to just 5% of total production.
“Given that manufacturing variances naturally occur, PTC urges FBR to increase this threshold to 10%, aligning with industry standards and preventing undue financial losses,” it said.
Another critical amendment under review is the elimination of the carry-forward provision for unutilized input goods. “Removing this flexibility would force exporters to consume input materials faster than their production cycles allow, leading to inefficiencies and financial burdens,” it said.
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PTC was of the view that the carry-forward provision should remain in place, allowing unutilized goods to be carried into next year upon submission of reconciliation statements.
Additionally, the FBR has proposed reducing the timeframe for uploading domestic acquisitions with zero-rated sales tax from 30 days to just 7 days.
PTC warned that this drastic reduction could create administrative inefficiencies and expose exporters to penalties for minor delays.
“Therefore, it strongly recommends restoring the original 30-day deadline to provide businesses with a practical and manageable compliance window.”
PTC said it would be ideal to restore EFS in its original form when local purchases were also covered under EFS.
“The proposed amendments, if implemented without the suggested modifications, risk reducing the ease of doing business and making Pakistani products less competitive internationally,” PTC warned, as it called upon the FBR to engage in dialogue with industry representatives in this regard.
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