LAHORE: Local cotton growers and ginners are expressing deep concern over the sharp decline in domestic cotton prices and sales, despite a significant drop in overall cotton production. This alarming situation is being attributed to record-high cotton imports from foreign markets.
According to the Pakistan Cotton Ginners Association (PCGA), up to Dec 15, the total ginned cotton in the country amounted to 5.36 million bales, reflecting a 33 per cent decrease compared to the same period last year.
Punjab and Sindh, the two major cotton-producing provinces, witnessed sharper production decline of 34pc and 32pc, respectively.
Ginners want levy on import, withdrawal of 18pc sales tax on domestic purchase
The report further reveals that textile mills have purchased only 4.7m bales during this period, marking a 34pc decrease year-on-year. Similarly, exports have plummeted by a staggering 84pc to 46,300 bales.
Ihsanul Haq, chairman of the Cotton Ginners Forum, highlighted that despite a 33pc decrease in cotton production, ginning factories across the country currently hold stocks of approximately 6.14m bales, a level similar to the previous year.
He attributed this to the zero sales tax on imported cotton and cotton yarn, while domestic purchases are subject to an 18pc sales tax. Consequently, textile mill owners are heavily importing cotton and yarn during the 2024-25 cotton year.
According to official statistics, Pakistan imported 182,000 metric tonnes (equivalent to 11.38m bales) of cotton by Nov 30, with a significant portion of this imported in October and November alone. Additionally, yarn equal to approximately 600,000 bales of cotton has been imported during the same period.
Experts estimate that Pakistan will import between 55 and 60m bales of cotton or cotton yarn during the current year, resulting in a significant outflow of foreign exchange.
Haq urged the federal government to impose sales tax on imported cotton and yarn as well while exempting domestic purchases to promote local agriculture and industry and strengthen the national economy.
Published in Dawn, December 19th, 2024
