KARACHI, June 7: Cotton market on Tuesday welcomed the new budget, which is generally called “textile budget” as government has gone all out to give it a maximum possible relieves and import duty cuts to boost textile exports to $10 billion during the next fiscal starting from July 1, 2005.
“Lint cotton, being a major raw material, which is expected to play a vital role in achieving the export target, if all goes well with the new crop and prices remain competitive,” ginners said.
The removal of 15 per cent general sales tax on the purchase of lint, which was to be refunded in the form of duty drawback at the export level will have a positive impact on the export shipments after the elimination of villain of the game in-between, spinners said.
“The new budget provides a level-playing field on the export front, with the zero-duty option and how the spinners and mills perform under the new regime will be the chief supporting factor behind the current export drive,” cotton analysts said.
They would much depend on the value-addition by the spinning sector in tax-free environment as far as the government is concerned it has met all the demands of the textile sector and now the ball is in its court, they said.
The new couple of sessions will show how the ginners and growers will react to the new mechanism and its impact on their performance during the next season as zero-duty regime also benefits ginners who previously had to collect sales tax from the spinners and then to deposit in government coffers.
As a result, there was a relative calm on ready counter as both buyers and sellers remained busy analyzing the likely impact of the fiscal and taxation measures on their business interests.
Official spot rates remained pegged at the last levels in the absence of any feedback from the ready section. But on the other hand New York cotton futures fell further by 0.97 and 1.15 cents per lb for both the ruling July and the new crop October contracts at 47.37 and 50 cents per lb respectively.
Ready off-take was light as barring few odd lots, which changed hands there were no reports of fresh deals .The post-budget sessions will show whether or not ginners go all out to sell their stray unsold stocks.