PTC calls for revisions to Export Facilitation Scheme

March 06, 2025 (MLN): The Pakistan Textile Council (PTC) has called on the Federal Board of Revenue (FBR) to reconsider proposed amendments to the Export Facilitation Scheme (EFS), cautioning that any modifications failing to safeguard the industry's interests could adversely affect Pakistan’s exports.

In a letter to the Secretary Export Policy (FBR), PTC emphasized that 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.

However, the proposed amendments outlined in S.R.O. 204 (1)/2025 may create operational inefficiencies and burden exporters with unnecessary compliance requirements.

While acknowledging the need for improvements, PTC stressed that amendments must focus on increasing efficiency rather than disrupting established processes.

A key concern raised pertains to the processing timeline for determining production capacity and input-output ratios, as per the press release.

Under the proposed changes, 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.

PTC has recommended reducing the processing time to 30 days and increasing provisional approval to 50%, ensuring business continuity.

PTC also expressed concerns over the proposed extension of monitoring timelines for pending cases under the Chief Collector (Exports & IOCO) to 60 days, arguing that it could slow down approvals and disrupt supply chains.

The council has called for maintaining the current 30-day timeline to balance regulatory oversight with operational efficiency.

Another issue highlighted is the requirement for annual authorization of input goods based on IOCO assessments, making future authorizations contingent upon the Regulatory Collector’s discretion.

PTC warned that this could introduce uncertainty and bureaucratic obstacles.

Instead, it suggested an automatic authorization process upon submission of reconciliation statements, with audits used to address discrepancies.

PTC strongly opposed the proposed reduction of the input utilization period from 60 months to 9 months, stating that it could lead to procurement disruptions and increased costs.

It recommended maintaining a 24-month utilization period with an additional 6-month extension granted by the Regulatory Authority, while further extensions should require FBR committee approval.

The council also raised concerns over the proposed restriction on B-grade or rejected goods, which would limit their proportion to just 5% of total production.

Given natural manufacturing variances, PTC urged FBR to increase the threshold to 10% to prevent financial losses.

Another critical amendment under review is the elimination of the carry-forward provision for unutilized input goods.

PTC argued that removing this flexibility would force exporters to consume input materials faster than their production cycles allow, leading to inefficiencies and financial burdens.

It insisted that the carry-forward provision should remain in place, allowing unutilized goods to be carried into the next year upon submission of reconciliation statements.

Additionally, PTC warned against the proposed reduction in the timeframe for uploading domestic acquisitions with zero-rated sales tax from 30 days to 7 days.

The council stated that this drastic change could create administrative inefficiencies and expose exporters to penalties for minor delays.

It strongly recommended restoring the original 30-day deadline to provide businesses with a practical compliance window.

PTC reiterated that the EFS has been instrumental in fostering an export-friendly environment, particularly benefiting the textile sector.

While regulatory oversight is necessary, excessive restrictions and prolonged approval times could hinder businesses that drive Pakistan’s exports.

The council urged FBR to restore EFS to its original form, including local purchases under its scope.

In this regard, PTC called upon FBR to engage in meaningful dialogue with industry representatives to ensure that the amendments support export sector growth rather than create unnecessary obstacles.

By incorporating its recommendations, PTC believes FBR can maintain an effective framework for exporters while addressing regulatory concerns.

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