KARACHI, June 14: The post-budget session on the cotton market on Monday was cheerless as buyers and sellers kept to the sidelines apparently having fuller view of the fiscal measures before resuming normal trading.

However, the withdrawal of 15 per cent sales tax on the ginned cotton was widely welcomed by both the high-ups of the Karachi Cotton Association (KCA) and those associated with the cotton trade.

But the levy of 15 per cent sales tax on cottonseed, a by-product of lint cotton and one of the basic raw materials for the vegetable ghee industry along with palm oil, it was feared that it could have negative impact on the consumer's pocket in the form of higher prices at the retailers' end, brokers said.

But the abolition of sales tax on lint cotton will give the needed boost to textile exports and will enhance the competitiveness of the allied cotton-based ancillary industry, they said.

Aptma bosses have already welcomed the new fiscal reliefs but whether or not the benefits of liberal budget will be passed on to the growers will have positive impact on the entire cotton economy, market sources said adding "being the chief beneficiary of the reliefs, it could ensure fair price for the growers".

The taxation steps and the reliefs remained the hot topic of discussion among the ginners, spinners and leading brokers, having a negative impact on the ready business.

Spinners are expected to resume their normal buying operations after having fully analyzed the long-term impact on their working during the next year, which will be beginning of the WTO regime, brokers said.

Meanwhile, reports coming from the lower Sindh cotton belt indicated that new crop has started arriving in some of the ginneries on modest scale but the quantity is said to be small to resume ginning operations.

A new crop deal from a Sultanabad ginner, for delivery between Aug 15 to 20, reflects that ginning operations are expected to be resumed in the lower Sindh cotton belt in late July.

Official spot rates did not show any change and were quoted at Rs3,075 per maund. Owing to the absence of buyers and sellers, ready business was light totalling about 3,000 bales, which also included 200 bales, new crop from Sultanabad at Rs2,600 per maund. In the old crop, 700 bales, from Gothki was sold at Rs2,975 and 1,400 bales, from Vehari at Rs2,800.