LAHORE: Ginners claim that the government has ignored all their pleas in the budget regarding relief in sales tax on the cotton sector contrary to the assurances made to the effect.

Cotton Ginners ForumChairmanIhsanul Haq said in a statement that prior to the budget announcement, representatives of the Pakistan Cotton Ginners Association (PCGA) held discussions with several key federal officials. The government assured them that sales tax on cotton seed and oil cake would be completely abolished, and it would be significantly reduced for other related items.

However, none of these commitments were fulfilled, he regretted, instead, the Benazir Income Support Programme (BISP) funds were expanded by 17 percent to Rs838 billion, a move Haq criticised as endorsing charity over commerce, which would only strain the economy.

The immediate fallout of the budget announcement became visible in the markets, as prices of raw cotton, phutti, cotton seed, and oil cake suffered a sharp decline.

In the Karachi Cotton Exchange (KCA), spot rates for cotton plummeted by Rs500 per maund to stand at Rs1,000. In the open market, cotton prices dropped by Rs1,000 per maund, trading at Rs21,700 to Rs21,800 in Punjab and Rs20,500 in Sindh. The prices of cotton seed and oil cake in Sindh dipped by Rs500 per maund each to settle at Rs4,000, with market experts predicting further drops during the week.

Amidst these economic challenges, Prime Minister Shehbaz Sharif reissued directives for the immediate notification of the Pakistan Cotton Board (PCB) to spearhead the revival of the sector. The prime minister also asked all provinces, particularly Balochistan, to submit dedicated plans to maximize domestic cotton production.

Mr Haq said that since cotton sowing for the current season had already been completed and ginning factories had commenced operations in various cities, these newly-proposed government measures might only bear fruit for the 2027-28 crop cycle.

He stressed that a true revival of Pakistan’s cotton sector remains impossible without strict enforcement of crop zoning laws, a complete ban on sugarcane cultivation and sugar mills within designated cotton zones, and an upgrade to the Pakistan Meteorological Department to provide farmers with timely, accurate weather forecasts for better planting and irrigation decisions.

He stated that the ginning sector was currently facing a cumulative sales tax burden of over 86pc. This includes an 18pc sales tax each on raw cotton, cotton seed, cotton seed oil, and oil dirt, alongside a 14pc tax on oil cake. He warned that this burden would spike by an additional 4pc for non-registered buyers.He noted that this exorbitant taxation had driven a persistent rise in undocumented trade within the ginning sector over recent years.

It is estimated that approximately 1.5 million bales of cotton, along with their derived cotton seed, oil cake, and oil, are being traded off-the-books annually. This informal trade not only inflicts billions in losses on the national exchequer but also misrepresents Pakistan’s total documented cotton yield internationally, damaging the country’s global image.

Published in Dawn, June 15th, 2026