KARACHI, June 7: Cotton traders on Saturday welcomed the new federal budget amid hopes that the positive impact of the textile package will spill over to the cotton trade as the performance of the both are literally inter-linked.

Although ginners, cotton traders and exporters did not get many direct benefits from the new budget, indications are that it could thrive on a robust textile sector in more than one ways.

“The boost in exports, higher textile productivity could well mean larger intake of lint, which in turn will ensure competitive prices for both the ginners and the growers,” says a cotton broker.

Some others claim the total abolition of the wealth tax, which was nicknamed as the hanging sword will go a long way in providing the needed relief to both the trade and industry and the other sectors of the economy.

The cotton trade is also expected to get a major boost from an ambitious incentive package given to the farm sector allowing farmers a number of concessions in the imports of agricultural implements, cheaper pesticides and cut in credit rates.

“The performance of the textile sector is essentially dependent on a robust farm sector and the new budget takes cares of the both to meet future WTO compulsions and comfortable supply of lint cotton at competitive rates to the textile industry,” cotton analysts said.

A sharp shortfall to 9.7m bales in cotton production below the twice revised target of 10.3m bales during the current season has created many problems for the textile industry in the backdrop of higher world lint prices, industry sources said.

However, there was no word on the widely rumoured winding up of the sale tax regime (15 per cent) on lint cotton, which is reimbursed in the form of rebate to the textile industry considered a futile exercise in some official quarters, they said.

Physical trading, therefore, remained at a low ebb as both the ginners and the spinners remained busy in analysing the negative and positive impact of the new fiscal measures on the cotton trade during the next fiscal.

New York cotton futures posted fresh gains of 0.25 and 0.30 cents per lb for both the ruling July and the new crop October settlements at 50.76 and 53.30 cents per lb.

But there was no change in the local spot rates in the absence of fresh ready business and were quoted at the overnight levels.