The All Pakistan Textile Mills Association (APTMA) has raised alarms over the deteriorating state of the spinning industry, warning that pro-import tax policies are pushing the sector towards collapse. APTMA Chairman Kamran Arshad revealed that over 100 spinning mills, accounting for nearly 40 percent of the industry’s production capacity, have already shut down, while the remaining mills are operating at less than 50 percent capacity.

The crisis has been exacerbated by a surge in yarn imports, which reached a record 32 million kilograms in January 2025. Imports for the fiscal year 2024-25 are projected to triple compared to FY24, further threatening the viability of local manufacturers.

The chairman criticized the current sales tax regime, which imposes an 18 percent tax on domestic supplies for export manufacturers while allowing duty-free imports. He warned that this disparity could lead to the local textile sector being overtaken by imported goods, resulting in severe economic consequences for the country.

Exporters are also burdened by the upfront payment of sales tax, with refunds delayed for up to a year. Around 30 percent of claims are withheld indefinitely due to manual processing, further straining the industry’s cash flow and competitiveness.

APTMA has called for urgent policy reforms to eliminate the tax burden on local raw material supplies and restore competitiveness to domestic textile manufacturing. The association urged the government to ensure equal treatment for local suppliers in export manufacturing to prevent further closures and safeguard the industry’s future.