ISLAMABAD, Sept 30: The Pakistan Textile Council has urged the government to cut the corporate income tax rate to 15%, speed up tax refunds and provide regionally competitive energy prices as part of a broader plan to strengthen textile and apparel exports.
The proposals come as the industry enters FY2026-27 facing high energy costs, a weakening domestic cotton base, financing constraints and shipping disruptions, according to the Pakistan Textile Council’s Annual Export Performance Report on textile and apparel exports for FY26.
The council has outlined 11 recommendations covering taxation, energy, financing, market access, logistics and cotton, with federal ministries, regulators and other government institutions identified for implementation.
PTC seeks corporate tax cut to 15%
On taxation, the Pakistan Textile Council recommended reducing the corporate income tax rate to 15% from the current headline rate of 29%.
The council said exporters may also face Super Tax exposure if they fall below the 80% export-ratio threshold, while competing regional economies are moving towards lower tax burdens.
It also called for faster sales tax and deferred sales tax refunds, along with automation of income tax refund processing.
Another recommendation seeks greater integration between provincial sales tax refund systems and the Federal Board of Revenue to reduce delays and improve efficiency.
Competitive energy prices seen as key to exports
Energy costs remain one of the textile sector’s biggest competitiveness concerns.
The council urged the government to ensure regionally competitive energy prices and reliable supply for textile manufacturers, arguing that lower and more predictable energy costs would improve operational efficiency and export competitiveness.
PTC said addressing energy-related constraints would be essential if the sector is to expand production and compete more effectively in international markets.
Financing access for SMEs and exporters
The report also identified access to finance as a priority.
The council proposed increasing budgetary allocations for recently announced financing schemes, relaxing eligibility requirements for small and medium-sized enterprises and extending financing facilities to indirect exporters.
PTC said broader access to financing could help firms invest in production capacity, technology and export expansion.
Calls for stronger market access
Market access is another major part of the council’s roadmap.
PTC called for long-term continuity of the European Union’s GSP+ facility and urged the government to pursue additional trade agreements, including free trade agreements with the United States and the United Kingdom.
The council said preferential access is important because the EU, US and UK account for a major share of the country’s textile and apparel exports.
In FY2025-26, textile and apparel exports stood at $7.103 billion to the European Union, $4.853 billion to the United States and $1.730 billion to the United Kingdom.
Shipping costs and logistics under focus
The council also proposed measures to address logistics and shipping constraints faced by exporters.
It recommended engagement with shipping lines to secure competitive freight rates and shorter delivery times, while also calling for greater capacity at the Pakistan National Shipping Corporation to meet exporters’ requirements in key international markets.
PTC said reliable and cost-effective shipping would be increasingly important as manufacturers compete on both price and delivery timelines.
National cotton strategy proposed
For the cotton sector, the council called for an integrated national strategy covering seed quality, farmer digitisation and traceability.
The Ministry of National Food Security and Research, Pakistan Central Cotton Committee and provincial agriculture departments were identified as key institutions for implementing the proposed measures.
The recommendation comes amid concerns over the declining domestic cotton base, which has increased pressure on textile manufacturers that depend on imported raw material.
Textile exports reach $18 billion
The recommendations were released as textile and apparel exports reached $18 billion in FY2025-26, up 0.3% from a year earlier, even as overall exports declined by 5.9%.
The sector accounted for about 60% of national exports during the year.
Value-added apparel and home textile products under Chapters 61 to 63 generated $14.98 billion, while raw materials and intermediate goods under Chapters 50 to 60 declined to $3.03 billion.
The council said turning the sector’s resilience into sustained growth would require coordinated action on energy prices, access to finance, tax refunds, preferential market access, shipping, logistics and domestic cotton production.
PTC said the next step would be sustained engagement with government institutions and industry stakeholders to translate the recommendations into policy action during FY2026-27.