Karachi: Due to local textile mills’ preference for purchasing imported cotton at cheaper prices, cotton and cotton yarn imports have reached record levels this year, and the significant decline in cotton and sliver prices has raised fears of an unprecedented decline in cotton cultivation.
During the cotton year 2025-26, the country is likely to import billions of dollars worth of cotton and cotton yarn, along with edible oil, for a significant amount of foreign exchange.
The federal and provincial governments should end the sales tax exemption on cotton and cotton yarn imports before launching a campaign to increase cotton cultivation so that the textile mills can start purchasing domestic cotton and the prices of cotton and sliver improve, which can increase the tendency of farmers to cultivate cotton.
Chairman Cotton Ginners Forum Ehsan-ul-Haq told Express that in the federal budget 2024-25, policymakers made the import of cotton and cotton yarn free of sales tax, while imposing an 18% sales tax on their purchase domestically.
For some time, cotton prices in international markets had been higher than in Pakistan, but due to the large reserves of imported cotton and yarn, there was no significant impact on the prices of cotton and cotton sliver in local cotton markets.
Ehsan-ul-Haq said that due to the re-decline in cotton prices in international markets, export-oriented textile mills have completely suspended the purchase of cotton and cotton yarn from the country and started importing them on a large scale.
Due to which, despite the fact that cotton production in Pakistan this year is 50 percent below the target and 34 percent less than last year or 5.5 million bales less, cotton stocks in ginning factories are 35 percent and due to non-purchase by textile mills, cotton prices have fallen from Rs. 1,500 to Rs. 2,000 per maund in the past month.
