By Moaaz Manzoor

The Pakistan Textile Council (PTC) has called for long-term fixed-rate financing, restoring the Final Tax Regime and removing advance taxes on exporters in the upcoming budget, as high borrowing costs and tax-related cash-flow pressures are holding back industrial investment and export growth.

In a statement, PTC Chairman Fawad Anwar said that the export sector is facing a combination of high financing costs, elevated energy tariffs, liquidity constraints and an increasingly complex tax regime. He said these factors had weakened the exporters’ ability to invest in capacity expansion, technology upgrading and new export-oriented manufacturing units.

“The upcoming budget presents an opportunity to shift the economy towards investment-led and export-driven growth,” he said, adding that long-term financing at fixed rates, reinstatement of the Final Tax Regime and removal of advance taxes would provide certainty to investors and exporters.

The demand comes ahead of the federal budget at a time when Pakistan is seeking to revive exports, improve industrial competitiveness and reduce pressure on the external account. Exporters have argued that the cost of doing business in Pakistan remains high compared with regional competitors due to steep energy tariffs, taxation and financing costs.

Anwar said industrial projects required long-term financial planning and predictable borrowing costs. He proposed a dedicated financing facility with a fixed markup rate for up to 10 years, arguing that such a mechanism would support expansion, modernisation and fresh investment in export-based manufacturing.

According to the PTC, high interest rates have discouraged businesses from undertaking long-term industrial projects, while uncertainty over future financing costs has made planning more difficult. A 10-year fixed-rate facility, it said, would help companies plan investment cycles with greater confidence.

The council also called for restoration of the Final Tax Regime for exporters, saying a simpler tax framework would reduce compliance burden and allow exporters to focus on production and market expansion. It said the current tax structure had added complexity to export operations and increased the administrative burden on businesses.

Anwar said exporters should not be subjected to multiple advance tax deductions, as these affected cash flows and increased the cost of doing business. He said the removal of advance taxes would ease liquidity pressure on export firms, especially those operating on thin margins.

Liquidity has remained a major concern for exporters, who argue that delayed refunds, withheld payments and advance deductions reduce the working capital available for raw material procurement, wage payments and technology investment.

The PTC said that Pakistan had significant untapped export potential and could benefit from the ongoing restructuring of global supply chains. However, it said this opportunity could be converted into higher exports if the policy environment supported investment and manufacturing.

The council maintained that exports were among Pakistan’s most sustainable sources of foreign exchange earnings and job creation. It said policy measures in the upcoming budget should focus on lowering the cost of doing business, improving competitiveness and creating a stable environment for industrial investment.

“The right budgetary decisions can unlock new investment, increase production capacity and place the economy on a stronger growth trajectory,” Anwar said.

The PTC expressed hope that Budget 2026-27 would include practical reforms to support exporters, attract investment and strengthen Pakistan’s position as a competitive manufacturing and export hub.

For policymakers, the key challenge will be to balance revenue needs with the export sector’s demand for relief. The textile industry’s proposals indicate that exporters need predictable financing, simplified taxation and relief from liquidity pressures to achieve investment-led export growth.

Credit: INP-WealthPk