By Qudsia Bano

The Pakistan Textile Council (PTC) has proposed cutting the corporate income tax rate to 15%, accelerating tax refunds and ensuring regionally competitive energy prices as part of a broader roadmap to strengthen Pakistan’s textile and apparel exports.

According to the Pakistan Textile Council’s Annual Export Performance Report: Pakistan’s Textile & Apparel Exports FY26, available with Wealth Pakistan, the sector enters FY2026-27 facing structural challenges including energy costs, a declining domestic cotton base, financing delivery gaps and shipping volatility.

The council has outlined 11 strategic recommendations covering taxation, energy, financing, market access, logistics and cotton, with relevant federal ministries, regulators and other government institutions identified for implementation.

On taxation, PTC recommended reducing the corporate income tax rate to 15% from the current headline rate of 29%.

The council said the 29% rate also comes alongside Super Tax exposure for exporters falling below the 80% export-ratio threshold, while regional and competitor economies are moving in the opposite direction.

It also called for accelerating sales tax and deferred sales tax refunds and automating the processing of income tax refunds. Another recommendation seeks to automate and integrate sales tax refunds administered by provincial revenue authorities with the Federal Board of Revenue.

Energy competitiveness forms another major component of the roadmap.

PTC recommended that the government provide the textile sector with regionally competitive energy prices and reliable energy supply, while addressing energy-related constraints to improve the sector’s competitiveness and operational reliability.

The council also identified financing as a priority area. It proposed enhancing budgetary allocations for recently announced financing schemes, easing eligibility criteria for small and medium-sized enterprises and extending financing schemes to indirect exporters.

Market access is another key component of the recommendations.

PTC called for securing the long-term continuity of GSP+ and pursuing additional trade agreements, including free trade agreements with the United States and United Kingdom, to match preferential access available to competitor countries.

The issue is particularly important because the EU, the United States and the United Kingdom together account for the overwhelming share of Pakistan’s textile and apparel exports. In FY2025-26, exports stood at $7.103 billion to the EU, $4.853 billion to the United States and $1.730 billion to the UK.

PTC also proposed measures to address logistics constraints facing exporters.

It recommended ensuring competitive freight rates and shorter lead times through engagement with shipping lines, while simultaneously enhancing the capacity of the Pakistan National Shipping Corporation to meet exporters’ demand for shipments to markets of interest.

For the cotton sector, the council called for launching an integrated national cotton 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 the relevant authorities for the proposed intervention.

The recommendations come as Pakistan’s textile and apparel exports reached $18 billion in FY2025-26, up 0.3% from the previous year, even as the country’s overall exports declined 5.9%.

The sector accounted for roughly 60% of national exports. Value-added apparel and home textile made-ups under Chapters 61-63 reached $14.98 billion, while raw materials and intermediates under Chapters 50-60 declined to $3.03 billion.

The report said turning the sector’s resilience into sustained growth would require action on energy competitiveness, exporters’ access to finance and refunds, preferential market access, shipping and logistics, and the domestic cotton base.

PTC said the consistency of the findings across export-oriented, balanced and domestic-focused members provides the basis for a coordinated, full-value-chain advocacy agenda for FY2026-27.

The council said the next step is to convert the consultation into sustained follow-through with government and industry stakeholders.

Credit: INP-WealthPk