Pakistan exporters urge caution on Export Facilitation Scheme changes

Pakistan’s leading exporters have urged the federal government to exercise caution in amending the Export Facilitation Scheme (EFS), warning that the recently approved changes by the federal cabinet could negatively impact the country’s exports.

Industry representatives argued that the amendments may create hurdles for exporters, affecting their competitiveness in global markets. They called on the government to consult stakeholders before implementing any modifications to ensure the scheme continues to support export growth.

Meanwhile, Federal Minister for Planning, Development, and Special Initiatives Ahsan Iqbal will chair the first meeting of the prime minister’s committee to review the EFS on Friday.

Sources said the cabinet approved amendments to the EFS, including reducing the input utilization period from 60 months to nine months. The business community has voiced concerns that the changes may create operational inefficiencies and increase compliance burdens for exporters.

The EFS has played a key role in fostering an export-friendly environment, particularly benefiting the textile sector. Exporters argue that while regulatory oversight is necessary to prevent misuse, excessive restrictions and prolonged approval times could stifle businesses that drive Pakistan’s exports.

FBR, commerce ministry at odds

Sources told Nukta Pakistan's revenue collection body Federal Board of Revenue (FBR) and the Ministry of Commerce remain at odds over the scheme. FBR officials argue that the government is not collecting due taxes under EFS, while the ministry contends that FBR should enhance oversight without disrupting compliant exporters.

Ministry officials note that less than 1% of the scheme faces issues, making it unfair to impose new restrictions on 99% of compliant exporters.

PM’s committee to evaluate impact

The Prime Minister’s Office recently formed a committee under the planning minister to review the EFS. Members include the ministers for finance and commerce, FBR chairman, a Customs member, and industry representatives, including Musadaq Zulqarnain, Shehzad Saleem, and Ziad Bashir.

The committee has been tasked with assessing whether recent changes disproportionately favor imports over local suppliers and evaluating their impact on domestic manufacturers, balance of payments, and export sector growth.

Textile industry warns of disruptions

Separately, the Pakistan Textile Council (PTC) wrote to the FBR, raising concerns over proposed EFS amendments. The changes, it argues, could create uncertainty for manufacturers operating under strict schedules.

Under the proposed amendments, the Input Output Coefficient Organization (IOCO) would have 60 days to process applications, with exporters allowed only provisional acquisition of 25% of their declared input goods. The PTC has recommended reducing the processing time to 30 days and increasing provisional approval to 50% to prevent operational disruptions.

The PTC also opposes extending monitoring timelines for pending cases under the Chief Collector (Exports & IOCO) to 60 days, warning that it could slow approvals and disrupt supply chains. Instead, it has called for maintaining the 30-day timeline to balance oversight with efficiency.

The PTC has raised concerns over amendments requiring annual authorization of input goods based on IOCO assessments, arguing that it could introduce bureaucratic delays. It has proposed an automatic authorization process upon submission of reconciliation statements, with discrepancies addressed through audits.

Exporters also oppose reducing the input utilization period from 60 months to nine months, calling it impractical and costly. PTC recommends maintaining a 24-month utilization period with a six-month extension by the regulatory authority, and further extensions requiring FBR committee approval.

The textile sector has also urged FBR to reconsider a proposed restriction on B-grade or rejected goods, which would limit them to 5% of total production. Given natural manufacturing variances, PTC suggests increasing the threshold to 10% to align with industry standards and prevent financial losses.