Latest news with #PakistanCottonGinnersAssociation
Business Recorder
11 hours ago
- Business
- Business Recorder
Punjab seeks tax relief for cotton industry
LAHORE: Punjab Agriculture Minister Syed Ashiq Hussain Kirmani disclosed on Wednesday that talks are underway with the federal government and the prime minister to remove income and sales tax from the cotton industry. He hoped that these taxes will be removed in the 2025-26 budget with the aim to make cotton farming more profitable for growers. The Minister was addressing a delegation of the Pakistan Cotton Ginners Association which called on him at the Agriculture House. Sharing the strategy adopted by the Punjab government this year to enhance sowing of cotton, the Minister informed the delegation that one million acres of land previously used for rice have been shifted to cotton this year. The Minister also threw light on Cotton Campaign 2025–26, early sowing, early operation of ginning factories, cotton pricing, taxation on local cotton, and the enforcement of the Cotton Control Act. During the meeting, the Cotton Ginners Association shared the challenges currently facing the industry. Member of Provincial Assembly Rana Saleem and Punjab Agriculture Secretary Iftikhar Ali Sahoo were also present. Speaking on the occasion, Minister Kirmani said that cotton is Pakistan's main cash crop. Following the vision of Punjab Chief Minister Maryam Nawaz Sharif, the Agriculture Department has introduced effective measures across the province, especially in South Punjab, to revive and stabilize cotton production. As a result, cotton cultivation has improved significantly, and the area under cultivation has increased. He declared this year as the 'year of cotton revival.' To promote cotton farming, the Agriculture Department launched a strong awareness campaign. Between February 15 and March 31, an ambitious goal of sowing cotton on one million acres was set and successfully achieved - a milestone not reached in the last 10 years. So far, cotton has been cultivated on 3.3 million out of the targeted 3.5 million acres, and efforts continue to reach four million acres. The department conducts third-party verification to ensure transparency in meeting targets. The Minister urged ginners to adopt modern technology, noting that many factories still use outdated methods that reduce the international demand for Pakistani cotton. He stressed the need to upgrade ginning processes and assured full government support for introducing new technology in the sector. Punjab Agriculture Secretary Iftikhar Ali Sahoo said that this year, demonstration plots were established in South Punjab where Integrated Pest Management (IPM) techniques were fully implemented. He also noted that the private sector took responsibility for supporting cotton farming at the tehsil level, setting a positive example. Copyright Business Recorder, 2025
Business Recorder
3 days ago
- Business
- Business Recorder
Weekly Cotton Review: Prices steady, trading activity subdued
KARACHI: The cotton market is showing stability in prices, though trading activity remains subdued. New crop deals for the 2025-26 seasons are being finalized between Rs. 17,200 to Rs. 17,500 per maund, while phutti (seed cotton) is trading at Rs. 8,000 to Rs. 8,500 per 40 kg. According to industry sources, approximately 2,200 bales of the new crop have already arrived at ginning factories across the country. Currently, three ginning factories in Sindh and four in Punjab are partially operational. Market participants anticipate a significant uptick in trading after Eid-ul-Adha. Punjab's Secretary of Agriculture, Iftikhar Ali Soho, reported that the province has achieved 94% of its cotton cultivation target for the current season. Meanwhile, the textile industry has renewed its demand for the abolition of the Export Facilitation Scheme (EFS) and the removal of the 18% sales tax on locally produced cotton. Additionally, calls for eliminating the General Sales Tax (GST) persist, with expectations that the issue may be addressed in the upcoming budget. The Pakistan Cotton Ginners Association (PCGA) and the All Pakistan Textile Mills Association (APTMA) have jointly urged the government to scrap the EFS and abolish the 18% sales tax on domestic cotton. Chairman of the Cotton Ginners Forum (CGF), Ihsan-ul-Haq, warned that the entire cotton sector is grappling with the worst economic crisis in the country's history, stressing the need for immediate policy interventions to revive the industry. During the past week, the local cotton market saw stable prices for cotton. Trading remained limited as the partial arrival of the new cotton crop has begun. Currently, three ginning factories in Sindh province are partially operational, while four ginning factories in Punjab province have also partially started ginning. Partial arrival of phutti (seed cotton) from the lower regions of Sindh has commenced, with approximately 2,200 bales of phutti having reached ginning factories so far. Increased trading activity is expected after Eid-ul-Adha. The government has set a production target of one crore eighteen lakh bales for the new 2025-26 season. Currently, trading in the ongoing season is slow, with cotton prices ranging between 15,000 to 17,500 rupees per maund. Most transactions are being conducted on credit, with deals based on quality and payment conditions. The stock of cotton with ginners is gradually decreasing. Federal Minister for Trade Jam Kamal Khan has stated that the government is seriously working to eliminate the 18% general sales tax on local cotton in order to boost cotton production. He shared this during a press conference on Monday. The PHMA (Pakistan Hosiery Manufacturers Association) has urged the government to reduce electricity tariffs during peak hours to promote exports. In Sindh and Punjab provinces, cotton trading took place between 15,000 to 17,500 rupees per maund, depending on quality and payment conditions. New crop transactions were recorded at 17,000 to 17,500 rupees per maund, while phutti (seed cotton) was sold at 8,000 to 8,800 rupees per 40 kg. The Karachi Cotton Association's Spot Rate Committee maintained the spot rate stable at 16,700 rupees per maund. Naseem Usman, Chairman of the Karachi Cotton Brokers Forum, said that international cotton prices are experiencing fluctuations. New York cotton prices showed a mixed trend, with futures trading between 65.50 to 69 cents. According to the USDA's weekly export and sales report, 118,700 bales were sold for the year 2024-25. Vietnam remained at the top by purchasing 65,600 bales. Bangladesh secured the second position by buying 17,300 bales, while Turkey ranked third with 12,400 bales. For the year 2025-26, 13,800 bales were sold. Pakistan led the purchases with 7,600 bales, followed by Thailand in second place with 3,500 bales, and Peru in third place with 2,600 bales. Meanwhile, Punjab Agriculture Secretary Iftikhar Ali Sahu has informed the Business Club that cotton cultivation has been completed on over 33 lakh acres in Punjab, and the province has achieved 94% of the set target. He stated this while presiding over a high-level review meeting on the current situation of cotton. Punjab Agriculture Secretary Iftikhar Ali Sahu said that a unique and successful tradition has been established to improve cotton production through phased cultivation. Pakistan's cotton sector is facing its gravest financial crisis in decades, prompting swift government attention after urgent appeals from the Pakistan Cotton Ginners Association (PCGA) and the All Pakistan Textile Mills Association (Aptma). Both associations have launched a high-profile lobbying campaign, writing to Prime Minister Shehbaz Sharif and initiating a nationwide media blitz, demanding the immediate abolition of the Export Facilitation Scheme (EFS) or the removal of sales tax on domestically produced cotton and its by-products. The premier subsequently sought policy recommendations from the Ministry of National Food Security and Research (MNFSR). In response, the ministry has formally endorsed the industry's proposals. In a letter to PCGA President Dr Jassu Mal, Cotton Commissioner Dr Khadim Hussain stated that the government has recommended that the 18pc sales tax on domestic cotton, cottonseed, oilcake, and cottonseed oil be lifted immediately, or that imports of cotton, yarn, and grey cloth be taxed at the same rate. The ministry's recommendations, forwarded to safeguard farmers' incomes, revive local production, and stem Pakistan's soaring dependence on costly cotton imports, it says. The communiqué notes that Punjab has implemented targeted subsidies for farmers to increase their incomes and reduce production costs for various crops. Industry data reveals that textile mills have imported over 300 million kgs of cotton yarn and two million bales of cotton during the first nine months of 2024-25, draining billions of dollars in foreign exchange. Despite this, domestic production has fallen to a historic low of just 5.5m bales. Meanwhile, more than 200,000 bales of unsold cotton and vast stocks of yarn remain idle in factories, with demand at a standstill. Cotton Ginners Forum Chairman Ihsanul Haq says the fallout has been devastating as over 800 ginning units and 120 spinning mills have ceased to function, while hundreds more textile units are barely functioning. 'If the current policy persists, the sector risks total collapse,' he warns, adding that Pakistan may soon be forced to import not only cotton but also edible oil, compounding the country's financial woes. The MNFSR's recommendations underscore the urgency, recommending immediate tax relief for domestic producers or the imposition of equal taxes on imports to restore a level playing field. All eyes are now on the federal government, as the fate of Pakistan's cotton and textile industry hangs in the balance. Copyright Business Recorder, 2025
Business Recorder
28-04-2025
- Business
- Business Recorder
Weekly Cotton Review: Prices stable amid low trading activity
KARACHI: Cotton prices have shown overall stability, while trading activity remained limited. New York cotton futures also recorded an improvement in prices. Indications suggest that the EFS (Export Finance Scheme) matter may be postponed until the budget. Frustrated with the government, the PCGA (Pakistan Cotton Ginners Association) has reportedly sent a letter to the Chief Justice of the Supreme Court after approaching the Army Chief, seeking judicial intervention in the matter. Meanwhile, the import bill is rising due to rising imports of cotton, cotton yarn, and textiles, as highlighted by Shahid Rasheed Butt, former President of the Islamabad Chamber of Commerce and Industry. Head Transfer of Technology Central Cotton Research Institute Multan Sajid Mahmood has said that the 18% sales tax on local cotton and the EFS facility on imported cotton are becoming an additional burden for cotton farmers and local industries. During the past week, the local cotton market overall remained stable. Trading took place between 15,500 to 17,500 rupees per maund, depending on quality and payment conditions. Interested mills are showing some interest in purchasing cotton, but ginners' stock of cotton is gradually decreasing. However, imported cotton is also arriving rapidly, and mills are making payments for it, which is causing a financial strain in the local market. Additionally, cotton yarn and fabric are also being imported, causing distress among textile spinners as they are finding it difficult to sell their yarn. On the other hand, weaving sector is also being affected. FPCCI, APTMA, PCGA, and other organisations have held several meetings with the relevant government departments regarding EFS. PCGA, disappointed with the situation, has even written a letter to the Army Chief, appealing for support in resolving EFS-related issues for cotton restoration and addressing ginning problems. It is being said that a decision on this matter will be made in the upcoming budget. Various reports are circulating about the ongoing cotton cultivation. In some areas condition of cotton crop is good, while others are facing complaints of water shortage. On the other hand, the intensity of the heat is also raising concerns about its impact on newly sprouted plants. In several regions, delays in cotton sowing may occur due to water-related issues. On the other hand, the import bill is increasing due to the import of cotton, yarn, and fabric. Shahid Rasheed Butt, former president of the Islamabad Chamber of Commerce, has stated that the rising competition in the global textile market is a cause for concern for Pakistan, which is also increasing global competition and the business costs of the textile sector. The decline in cotton production is further adding to the burden on the import bill. Additionally, disappointed by the government's delayed response, Dr Jassu Mal Leemani, Chairman of PCGA, has written a letter to the Chief Justice of the Supreme Court of Pakistan after the Army Chief, requesting symbolic intervention regarding discriminatory treatment against local cotton farmers. The letter also highlights the difficulties faced by local textile spinners, manufacturers, and cotton farmers due to the restoration of cotton and issues related to GST and EFS, urging intervention to ensure a level playing field. The rate of cotton in Punjab and Sindh as per quality and condition is in between Rs 15,500 to Rs 17,500 per maund. The Spot Rate Committee of the Karachi Cotton Association kept unchanged the rate at Rs 16,700 per maund. Naseem Usman, Chairman of the Karachi Cotton Brokers Forum said that international cotton prices remained stable overall. The price of New York cotton futures is currently trading between 68 to 70 cents per pound. According to the USDA's weekly export and sales report, sales for the 2024-25 season reached 104,000 bales. Vietnam remained at the top by purchasing 34,400 bales. India secured the second position by buying 22,500 bales, while Pakistan ranked third with purchases of 16,500 bales. For the 2025-26 season, 38,000 bales were sold. Indonesia led the purchases with 13,200 bales, followed by Peru in second place with 9,700 bales, and Honduras in third place with 9,300 bales. Chairman PCGA Dr Jassu Mal has written a letter highlighting a critical issue severely impacting Pakistan's agricultural sector— the unfair tax policies that disadvantage local cotton farmers and ginners while favouring imported cotton. The letter emphasizes the urgent need for policy reforms to address this imbalance, which is crippling the domestic cotton industry. Local cotton farmers and ginners face an excessive tax burden, including an 18% General Sales Tax (GST) on ginning, along with multiple withholding and indirect taxes. In stark contrast, imported cotton enjoys a complete exemption from these taxes, entering the country with zero percent sales tax and no import duties. This discriminatory policy has led to a steady decline in cotton cultivation and production, as farmers struggle to compete with cheaper, tax-free imports. The injustice has forced many farmers to abandon cotton in favour of other crops such as sugarcane, rice, and maize, which receive better government support and face fewer tax hurdles. This shift poses a serious threat to Pakistan's textile industry, a cornerstone of the national economy and a major source of employment and export revenue. The letter said that major cotton-producing nations including India, China, the United States, and Brazil, actively protect their domestic cotton industries by imposing import duties and taxes on foreign cotton. These countries also provide subsidies and incentives to their farmers, ensuring the sustainability of their agricultural sectors. Pakistan; however, does the opposite— taxing local producers heavily while allowing imported cotton to enter tax-free, creating an uneven playing field that stifles domestic growth. This policy not only violates constitutional principles of equity and justice but also undermines economic fairness. Dr Mal clarifies that this is not a plea for subsidies but a demand for equal treatment, urging the government to eliminate policies that penalize local producers in favour of foreign imports. He has appealed for immediate intervention, requesting a thorough review of current tax policies. The letter calls for urgent reforms to restore confidence in Pakistan's agricultural sector and ensure justice for cotton farmers and ginners, whose livelihoods are at stake. Without corrective measures, the continued decline of cotton farming could have far-reaching consequences for the country's economy and employment landscape. However, Sajid Mahmood, Head of the Technology Transfer Department at the Central Cotton Research Institute (CCRI), Multan, while speaking to Naseem Usman, highlighted the mounting challenges facing Pakistan's cotton sector. He noted that the imposition of an 18% sales tax on locally produced cotton and its value-added products is placing an additional burden on both growers and the domestic textile industry. Simultaneously, the allowance of duty-free import of cotton under the Export Finance Scheme (EFS) is undermining the competitive position of local producers. He further pointed out that policies encouraging large-scale imports of cotton and soybeans from the United States, coupled with the persistent under-funding of the Pakistan Central Cotton Committee (PCCC), the country's premier cotton research institution, have created uncertainty among farmers regarding the viability and future of cotton cultivation. Copyright Business Recorder, 2025
Express Tribune
12-04-2025
- Business
- Express Tribune
Textile millers demand restoration of EFS
Listen to article The All Pakistan Textile Mills Association (Aptma) has called for restoring the Export Facilitation Scheme (EFS) to protect long-term sustainability of Pakistan's textile exports and create room for negotiations with the US before the 90-day suspension of reciprocal tariffs comes to an end. "The government should immediately address the sales tax disparity between local and imported supplies for exports and create a level-playing field," Aptma Chairman Kamran Arshad said at a press conference on Friday. Pakistan Cotton Ginners Association Chairman Dr Jassu Mal and former chairman Sohail Harral also spoke. The first best solution was to restore EFS to the June 2024 position with zero rating for local supplies, they said. However, the International Monetary Fund has not accepted it. Under this scenario, according to the industry leaders, the only viable alternative is to prepare a negative list of high-risk imports under EFS, including all types of yarn and cloth. Under the FY25 budget, sales tax exemption on local supplies for exporters was removed, while imports of the same raw material and inputs were exempted from duty and sales tax. This policy shift has caused a significant disadvantage for local suppliers and is severely impacting the sustainability of the domestic industry and value chain, particularly small and medium enterprises, they said. Although 18% sales tax refund is technically available on local inputs, the refund process remains plagued with lengthy delays, partial disbursements and high administrative costs. Owing to this sales tax disparity, exporters prefer imported inputs, pushing local suppliers out of business. During FY25, imports of raw cotton, yarn and greige cloth are expected to increase by $1.6 billion whereas export growth during the same period is projected to reach $1.5 billion. Punjab offers incentives Meanwhile, the Punjab government assured Aptma of offering unprecedented incentives, which would be better than any other country, to woo Chinese investors to relocate operations to Pakistan in the wake of current tariff war. "A mechanism is being evolved to ensure no change in policy irrespective of which government comes in or goes out," Najaf Iqbal Syed, CEO of the Punjab Board of Investment and Trade (PBIT), said during a meeting with textile exporters in Lahore. He declared that the Punjab government would ensure full-scale security for the Chinese investors working in the province. He supported the idea of establishing and operating garment parks on the pattern of 'Plug and Play Model'.
Express Tribune
08-03-2025
- Business
- Express Tribune
Concerns mount as cotton output falls 34%
Listen to article Pakistan Business Forum (PBF) Chairman for South Punjab Malik Suhail Talat has expressed concern over the recent data released by Pakistan Cotton Ginners Association, which showed production of only 5.524 million bales in the cotton season 2024-25, a sharp decline from the previous year's harvest of 8.393 million bales. He attributed the decrease to various challenges faced by the cotton sector, particularly the lack of modern research, absence of Export Facilitation Scheme (EFS) and taxation. The general sales tax (GST) of 18% on oil, seed cotton and oilcake has worsened the situation, contributing to a 34% fall in cotton production. Data breakdown showed that in Sindh cotton arrival in ginning factories reached 2.8 million bales, reflecting a 32% year-on-year drop, while in Punjab, another major cotton-growing region, a sharper 36% decline was registered as output stood at 2.7 million bales. Talat also pointed to the negative impact of the government's decision to exempt imported cotton and yarn from sales tax, which "is detrimental to the local cotton sector". The imported raw cotton is reportedly costing the industry around $5 billion and is causing market volatility. Expressing reservations about the EFS committee formed by the prime minister, he argued that there was no need for such a body, while referring to the minutes of the revival of cotton committee meeting held under the Ministry of National Food Security and Research last month. During the meeting, all relevant stakeholders underscored the need for eliminating the EFS body with no necessity for any further committees. The PBF official also called for the immediate removal of 18% GST on locally produced cotton, adding that timely and decisive actions were essential to revitalise the cotton industry, particularly as the sowing season for 2025-26 crop was underway in both Punjab and Sindh. "We need to ensure that our cotton farmers are encouraged and supported through favourable policies. This is the only way forward for the future of Pakistan's cotton industry," Talat remarked. It is worth noting that Pakistan, which is among the top 10 cotton producers globally, is struggling to meet consumer expectations because of unfavourable weather conditions, pest infestations and structural inefficiencies in the sector.
