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Data from Brazil’s Federal Revenue Service Shows 67% Increase in International Purchases Between June and August; At the Same Time, ABVTEX States That Production Costs up to 30% Lower in Paraguay May Encourage New Expansions of Brazilian Textile Companies.
The increase in purchases from foreign websites and the cost difference between Brazil and Paraguay have again put the textile industry in a difficult position. Data from the Federal Revenue Service compiled by Abit show that international shipments totaled R$ 8.2 billion (about US$ 1.5 billion) between June and August 2026, a 67% increase compared to the same period in the previous year.
At the same time, the Brazilian Association of Textile Retail (ABVTEX) states that production in Paraguay can cost up to about 30% less in certain operations. The organization believes that this difference could stimulate new expansions of Brazilian companies in the neighboring country, especially after the removal of the federal tax of 20% on international purchases up to US$ 50.
International Shipments Grew After the Removal of the 20% Federal Tax
The 2026 figures reveal a rapid change in the volume of orders. According to a survey by Abit based on data from the Federal Revenue Service, Brazil received an average of 15.4 million international shipments per month between January and April. This total rose to 20 million in May, reached 28 million in June, and remained above 26 million in July and August.
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The monetary value also increased. The monthly average was around US$ 308 million between January and April and rose to approximately US$ 520 million between May and August. The comparison between June and August 2026 and the same period in 2025 resulted in a 67% increase, according to data released by the organization.
ABVTEX Says Cost Differences Could Lead to New Operations in Paraguay
According to Edmundo Lima, the executive director of ABVTEX, Paraguay has gained significance in investment decisions due to its combination of geographic proximity and lower costs. The organization estimates that the difference could be around 30% in some operations, especially when accounting for taxes, labor, and energy costs.
The association does not claim that all Brazilian companies will leave the country. The warning is about new lines, expansions, and additional units that may be directed to Paraguay when a company compares where to establish future production capacity.
Lupo Invested R$ 30 Million in Ciudad del Este and Aims to Produce 20 Million Pairs Annually
The most concrete case is that of Lupo. The Brazilian manufacturer opened its first industrial unit outside Brazil in 2025, in Ciudad del Este, with an investment of R$ 30 million (about US$ 5.5 million). The factory was designed to reach up to 20 million pairs of socks annually at full operation.
According to Rogério Bartkevicius, director of Lupo Paraguay, the maquila regime reduces operational costs by approximately 28% on average. He also pointed out the lower tax burden, simplified labor charges, and cheaper energy among the factors considered by the company.
In May 2026, then-CEO Liliana Aufiero announced that the Paraguayan operation had already achieved cost reductions of about 15%, while the company was working toward a target close to 30% as the factory progressed toward its planned capacity.
The Factory in Paraguay is an Expansion: Lupo Maintains Four Production Units in Brazil
Despite the impact of the investment, Lupo has not transferred all Brazilian production to Paraguay. The company informed verification agencies that it maintains four factories in Brazil and that the Ciudad del Este plant was created as a complementary operation.
The company also stated that the new unit did not replace or reduce production at Brazilian factories. This point is significant because the movement observed in the sector includes international expansion and the redistribution of new investments, not necessarily the automatic closure of plants in Brazil.
Over 50 Brazilian Textile Entrepreneurs Visited Paraguay to Evaluate Investments
The interest is not limited to Lupo. In June 2026, over 50 Brazilian entrepreneurs from the textile and apparel sectors participated in a mission to Paraguay to explore incentives, industrial parks, and production conditions.
The delegation met with authorities from the Paraguayan Ministry of Industry and Commerce and representatives from Rediex. The Paraguayan government presented the maquila regime, energy availability, proximity to the Brazilian market, and cost structure as factors attracting new projects.
Sawary Jeans also entered the radar of new industrial projects in the neighboring country
During the same period, the Paraguayan Ministry of Industry and Commerce reported that Brazilian company Sawary Jeans was evaluating the establishment of a production unit in the country. The founder and CEO of the company, Miled El Khoury, met with Paraguayan authorities to discuss incentives and investment possibilities.
The project was still presented as an evaluation, with no announcement of a completed factory. However, the episode reinforces that different companies in the sector are comparing costs and production alternatives beyond the Brazilian border.
End of the Blouses Tax Eliminated Federal Duty, but ICMS Continues to be Charged
The tax change that intensified the debate began in May when a provisional measure eliminated the 20% Import Tax on international purchases up to US$ 50. In September, the change was approved by Congress and sanctioned, making the federal exemption permanent.
This does not mean that these orders are free from all taxes. The state ICMS continues to be charged, with rates defined by the states and the Federal District. For purchases over US$ 50, other federal rules also remain in place.
Industry Criticizes the Exemption, While Platforms Defend the Effects on Consumption and Logistics
Entities from the national industry and retail, including Abit and ABVTEX, argue that the tax difference pressures the competitiveness of Brazilian production in the face of foreign platforms. On the other side, representatives of digital commerce claim that the tax reduction increases access to products and boosts activities related to e-commerce.
A study by LCA Economic Consulting cited by UOL found a net creation of over 218,000 formal jobs in the economy between May and June 2026, although commerce and the textile industry experienced losses during the same period. The survey covers only the first months after the change and does not solely resolve the debate on long-term effects.
Upcoming Investments Will Show If the Cost Difference Leads to a New Wave of Factories
For now, the facts show two simultaneous trends: international purchases have increased after the reduction of the federal tax, and Brazilian entrepreneurs continue to evaluate Paraguay as a production base. The scale of this movement will still depend on concrete decisions regarding investment, exchange rates, consumption, labor costs, energy, and tax rules in both countries.
Lupo is already operating in Paraguay, Sawary evaluated a new unit, and dozens of entrepreneurs visited the country seeking information. The question now is how many of these contacts will actually turn into factories and how much of the new production capacity in the sector will remain in Brazil.
