KARACHI: After record cotton imports, a large-scale import of cotton yarn in the textile sector has also been revealed, resulting in a decline in the prices of locally produced cotton and lint (Phutti), causing concern among cotton farmers and cotton ginners.
Chairman Cotton Ginners Forum, Ehsanul Haq, stated that, although cotton imports are exempt from sales tax, an 18% sales tax is imposed on the purchase of locally produced cotton and yarn. This disparity has prompted textile mills to import cotton and yarn on a large scale from various countries. Between July and October 2024, local textile mills imported 66,000 metric tonnes of cotton yarn, equivalent to about 450,000 bales of cotton.
In recent months, agreements were signed to import 3.5 million bales of cotton, of which around 1.2 million bales have already reached Pakistan. It is expected that Pakistan will import more than 6 million bales of cotton this year, marking the highest volume in the country's history to meet domestic needs. Furthermore, there is potential for importing one million bales of cotton in the form of yarn.
Haq mentioned that, according to the latest US cotton export data, Pakistan recently signed agreements to import 146,000 bales of cotton from the US in just one week, a record-high figure in the country's history. Despite a surge in international cotton prices due to these record imports, textile mill owners are showing little interest in purchasing locally produced cotton. This disinterest has led to a continued decline in the prices of cotton and sliver in Pakistan, raising significant concerns among the farmers and ginners.
Haq further noted that local cotton prices have fallen below Rs18,000 per bale. He appealed to the government to exempt the purchase of local cotton and yarn from the sales tax. According to him, this exemption could potentially improve the prices of domestically produced cotton and sliver.
