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Business Recorder
12-06-2025
- Business
- Business Recorder
APTMA, US CG discuss ways to foster bilateral trade
LAHORE: Kristin K Hawkins, United States Consul General in Lahore, and All Pakistan Textile Mills Association (APTMA) office-bearers discussed ways to foster bilateral trade and economic relations between Pakistan and the United States of America. Kamran Arshad, Chairman APTMA, Asad Shafi, Chairman North, Ahmad Shafi, Vice Chairman, Mohammad Qasim, Treasurer, Haroon Ellahi, senior Executive, former Chairman Ali Ahsan, and Secretary General Raza Baqir along with senior members of APTMA representing leading textile groups welcomed Kristin Hawkins, William Campbell, Economic Chief and Amna Anis Economic Specialist. They discussed the enormous potential to work together in the field of cotton and textile besides expanding trade and investment relations in other focused areas reducing trade deficit and diversifying major commodities of trade between both countries in the wake of US reciprocal tariffs. Both sides were of the view that Pakistan has strong potential to grow in textile and other sectors. APTMA leadership continued to focus on engagements and dialogue with their American counterparts to uplift trade volume and to gain maximum benefit of economic partnership between both the countries. Speaking on the occasion, Kamran Arshad made a detailed presentation on textile industry of Pakistan. He pointed out that Pakistan's domestic cotton production has declined over the years and even this year huge quantity of cotton would be required to be imported due to poor cotton crop. He said the major supplier of cotton to Pakistan is the USA. Pakistan is the largest importer of US cotton in the world. He added that the import of US cotton compensate loss in production of local cotton. According to Kamran, the availability of cotton and other inputs is essential for economy of the country as textile constitutes 62% of total exports from Pakistan. Kamran Arshad highlighted issues being faced by textile industry including withdrawal of Regionally Competitive Energy Tariff for both electricity and gas. He specifically mentioned discriminatory tax treatment for local supplies and import of inputs under Export Facilitation Scheme (EFS) which allows tax-free import of raw materials but levies sales tax @ 18% on procurement of locally produced goods. This discrimination has forced closure of 120 spinning mills and more than 800 ginning factories, increasing import of yarn from $340 million last year to $800 million this year. Kamran emphasised for restoration of even playing field both for imports and local supplies under EFS to ensure continuous operations of textile industry as any shut down of textile sector would render millions as jobless, creating catastrophic situation endangering survival of the country. He stressed on evolving a mechanism to import US cotton under GSM-102 against export of textile products to the US. He added that proceeds of Pakistan textile export to the US may be used as collateral through the mechanism of an escrow account whereby this liability is deducted from the export proceeds of Pakistan textile import into the US. Speaking about the strength of the textile industry in Pakistan and further expansion of bilateral trade between the US and Pakistan, Asad Shafi, Chairman North said that the US is Pakistan's largest trading partner with a total bilateral trade of $9.85 billion in 2024. According to him, total exports of Pakistan to the US stood at $5.12 billion out of which $3.93 billion or 77% were textile and apparel. As against this, Pakistan imported $2.14 billion goods from the US in 2024 of which cotton imports were more than $700 million. Asad stressed upon promotion of US cotton linkages with Pakistan textile industry, as well as, promotion of toll manufacturing in Pakistan by US textile industry. He said there is a need for technology transfer to Pakistan for high yielding cotton seed and synergies with US cotton research institutes for better quality. He also sought capacity building of agricultural research institutions in Pakistan and technology transfer for cotton traceability. Asad said that the United States should facilitate entry of international seed companies with transgenic technologies besides introduction of improved, genetically modified, and certified seed. He also spoke on the importance of establishing joint ventures between Pakistan and US investors. Meanwhile, speaker of the Punjab Assembly, Malik Muhammad Ahmad Khan, met with the United States Chargé d'Affaires, Natalie A. Baker, and US Consul General Kristin Hawkins, at the Punjab Assembly. The Speaker warmly welcomed the distinguished guests and termed their visit to the Assembly as a positive step towards strengthening institutional ties. On this occasion, Malik Muhammad Ahmad appreciated Natalie Baker's constructive and dynamic role in Pakistan, stating that Pakistan–US relations are based on mutual trust and a valued strategic partnership. He emphasized that the United States' proactive and constructive role in ensuring peace in South Asia is of utmost importance. The meeting included detailed discussions on Pakistan–US relations, regional peace, climate change, food security, educational collaboration, and cooperation in other vital sectors. The Speaker expressed a desire to further deepen ties between Punjab and the US state of California, noting that the Pakistani-American community continues to serve as a robust bridge between the two nations. He further remarked that Pakistan views the United States as a key global partner in addressing climate change, development, and food security, and wishes to expand this strategic cooperation even further. Natalie Baker affirmed that the United States aims to further strengthen diplomatic engagement with Pakistan and will continue to support democratic institutions and parliamentary exchanges. Kristin Hawkins expressed her intent to enhance collaboration in the fields of education and social development. The meeting was also attended by Member Provincial Assembly Iftikhar Chachar, Secretary General of the Punjab Assembly Chaudhry Amer Habib, Principal Secretary to the Speaker Imad Hussain Bhalli, and Malik Taimoor Ahmad Khan. Copyright Business Recorder, 2025
Business Recorder
12-06-2025
- Business
- Business Recorder
Imported cotton yarn: APTMA hails 18pc sales tax imposition
ISLAMABAD: The All Pakistan Textile Mills Association (APTMA) has appreciated imposing 18 percent sales tax on imported cotton yarn by the government. According to the Association, the budget addressed a major distortion in the market and is a significant step toward resolving the sales tax anomaly in the Export Facilitation Scheme (EFS). It demonstrates the government's commitment to restoring fairness and balance in the domestic textile value chain, and commended this decisive action. However, this correction—while welcomed—is insufficient in scope. After having dealt a severe blow to the spinning sector, the sales tax disparity is now eroding the viability of downstream sectors like weaving. EFS, under which imported inputs for export enjoy a zero percent sales tax rate while local materials for export are taxed at 18 percent, continues to place upstream domestic sectors at a gross disadvantage. Local cotton: Pakistan govt working to abolish 18% GST, says minister Chairman APTMA, Kamran Arshad, in a statement stated that to ensure true competitiveness and sustainability of Pakistan's textile value chain, APTMA strongly urges the government to extend the 18 percent sales tax to all yarns and fabrics, whether cotton or polyester, imported under EFS. Moreover, these imports must be placed on the EFS Negative List, imposing a 5 percent customs duty on yarn and 11 percent on fabric to establish a level playing field and incentivize local manufacturing. Without this, the gains made in one segment will be undone by distortions in another. He said the situation with poly-cotton and polyester yarns is particularly concerning, as they are already approximately 35 percent more expensive to produce domestically. Subjecting local manufacturers to 18 percent sales tax while exempting imported polyester inputs undermines industrial policy objectives and discourages investment in local capacity. APTMA also reiterated its demand for the removal of sales tax on cottonseed and cottonseed cake —by-products of cotton lint- used primarily in livestock feed. These items are not subject to sales tax in any major cotton-producing economy. Imposing 18 percent GST on these products pushes farmers below their cost of production, especially given the price inelasticity of demand, and drives a damaging shift toward more water-intensive crops. This not only imperils water security but also fuels underreporting of cotton production, thereby reducing revenue collection on cotton lint itself. 'We are grateful for the government's attention and responsiveness to industry concerns thus far. However, without extending similar GST treatment to all EFS imports of yarns and fabrics, the crisis faced by spinning will soon replicate in weaving. Yarn feeds into fabric production, and if locally produced fabric is taxed while imported fabric is not, exporters will inevitably choose the cheaper, untaxed import—undermining both the fabric and yarn sectors,' he added. APTMA has urged the government to adopt a comprehensive, value-chain-wide perspective. Partial reforms are insufficient. The core anomaly remains: imported inputs for export are exempted while local inputs are taxed. This policy penalizes domestic value addition, stifles backward linkages, and impedes the very foundation of an export-led growth strategy. Efforts to integrate into global value chains should continue, but not at the expense of domestic industry, employment, and investment. 'APTMA deeply appreciates the government's broader economic reform agenda, which has yielded substantial relief and renewed confidence across the industrial landscape. The reduction in power tariffs from an unsustainable 16–17 cents/kWh to approximately 11 cents/kWh, the successful curbing of back-breaking inflation, and the lowering of interest rates from 22 percent to 11 percent are commendable achievements,' Arshad continued. The Association further stated that these efforts have laid the groundwork for economic stabilization and set the stage for sustainable recovery. To translate this momentum into broad-based industrial growth and export expansion, it is imperative that remaining issues—such as the EFS-related tax anomalies—are addressed comprehensively. With these distortions resolved, the textile value chain can regain its full competitiveness, unlocking investment, job creation, and foreign exchange earnings for Pakistan. Copyright Business Recorder, 2025
Business Recorder
02-06-2025
- 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
30-05-2025
- Business
- Business Recorder
Bilateral trade: APTMA & textile bodies of Uzbekistan reach understanding
LAHORE: All Pakistan Textile Mills Association (APTMA) & Textile Associations of Uzbekistan have reached an understanding to impressively upsurge bilateral trade from the present level of US$114 million to much higher figure. This understanding was reached in a meeting of Uzbek textile delegation with members and office bearers of APTMA, held at APTMA, Lahore on May 29, 2025. Uzbekistan delegation consisted of Tokhtaev Akobirjon Khakimovich Deputy Chairman Chamber of Commerce, Jumaniyazov Mukhammadjon Bakhramjanovich Deputy Chairman Textile Industry Association, Dushanov Alisher Sherzodovich Head of Investment Department of Kharezm Region, Khamraev Rustam Elmuratovich Head of Department 'Sharof Rashidov Textile Plant' LLC, Abdullaev Shokhboz Founder 'Sanam' LLC, Kasimov Davron Founder 'Skerton Textile' LLC, Mamadaliev Daniyor Mamatvalievich Head of 'Mega Textile' LLC and Abdullayeva Dilorom Ubaydullaevna Represen-tative of CCI Uzbekistan. APTMA was represented by Kamran Arshad, Chairman APTMA, Danish Aslam, Muhammad Ali, Haroon Ellahi, senior executives of APTMA, leading textile manufacturers and exporters and Raza Baqir, Secretary General. Uzbekistan delegation headed by Tokhtaev Akobirjon Khakimovich, Deputy Chairman, informed APTMA about a series of concrete steps being undertaken by the governments of Uzbekistan and Pakistan in coordination with trade associations of both the countries to upsurge bilateral trade and avail benefits from mutual potential and strengths of both the countries. He added that this was second visit of Uzbek business delegation to Pakistan in a short span of two months and more delegations are expected in the coming months. He invited APTMA delegation to visit Uzbekistan and urged them to participate in the Investment Expo being held in Uzbekistan next month. Khakimovich said that both Pakistan and Uzbekistan share a long history and they are brothers not competitors or rivals. They should share their resources, knowledge and wisdom for common benefits. He informed that Uzbekistan Trade Center has been opened in Karachi and another is being inaugurated today at Lahore and the next one is planned for Islamabad. The visiting delegation said the two countries have already signed numerous agreements, including an agreement on Income Tax Convention and Final Protocol. Similarly, agreement is being signed between State Bank of Pakistan and Uzbek Bank for cooperation in banking. He stated that flights have been started from Lahore to Tashkent while takes only two hours to reach destination and more flights are being operationalized from Islamabad and Karachi to ease travel between both countries. Uzbek delegation proposed to sign an agreement of cooperation between APTMA and Uzbek Textile Association and a Memorandum of Understanding (MoU) for setting up an Uzbek trade center in Lahore. Uzbek team stated that hectic efforts are being made to finalize negotiations on transit trade between Uzbekistan and Pakistan to Afghanistan. He added that it is only 600km from Torkham to Uzbekistan with safe road passage and issuance of driver's visa is also being expedited to facilitate direct and rapid movement of cargo and persons. Speaking on the occasion, Chairman APTMA Kamran Arshad highlighted the problems in bilateral trade with Uzbekistan, saying that the issues confronting bilateral trade included logistic issues, obtaining and using Letters of Credit (LC) in trade with Uzbekistan, language barriers in labelling the goods in Uzbek or Russian languages, difficulties in land route due to security situation in Afghanistan, delay in signing of Preferential Trade Agreement (PTA) and delay in completion of trans Afghan railway line. Kamran highlighted incentive for setting up of industries in Pakistan. He said that Pakistan was strategically located with close proximity to all foreign markets via sea, air or land routes. He added that the goods produced in Pakistan have duty free access to European Union and China and preferential tariff for exports to Malaysia, Gulf and many other countries. He referred to a series of duties and tax exemptions for setting up of industries in Special Economic Zones (SEZ), Sole Enterprise Zone, Gawadar Free Trade Zone and on import of plant, machinery and raw materials for use in exportable goods. Kamran said there is a need for strengthening of banking channels between Pakistan & Uzbekistan, as flow of trade is hampered in absence of formal banking channel. He urged for an early signing of PTA, utilization of OIC, ECO, and Shanghai Trade Cooperation platforms for expansion of bilateral trade, joint investment in the textile industry and establishment of joint ventures, frequent exchange of trade delegations, synergies in bilateral trade expansion, mutual capacity building in textile sectors, and bilateral exchange of business delegations to identify trade and investment options as a way forward to solidify trade and investment relations between Pakistan and Uzbekistan, he added. Raza Baqir extended vote of thanks to the visiting Uzbek delegation at the end of the meeting and hoped that frequency of such visits will facilitate expansion of bilateral trade and joint ventures in all sectors of economy especially textiles. Copyright Business Recorder, 2025
Business Recorder
26-05-2025
- Business
- Business Recorder
Weekly Cotton Review: Trading activities remain limited
KARACHI: The New York cotton market showed mixed trends, while local cotton prices remained stable. However, trading activities were limited. The Commerce Minister hinted at a possible sales tax exemption on local cotton and proposed including it in the new cotton policy. Meanwhile, Pakistan's textile industry is rapidly declining, as expressed by Kamran Arshad, Chairman of All Pakistan Textile Mills Association (APTMA). Similarly, Ehsanul Haq warned that the cotton industry could face the worst economic crisis in history. In Faisalabad, representatives from All Pakistan Textile Mills Association (APTMA), Pakistan Cotton Ginner's Association (PCGA), All Pakistan Textile Processing Mills Association (APTPMA) / Council of Power Looms Associations/ PYMA held a joint press conference regarding EFS (Export Facilitation Scheme) and highlighted related concerns. Ehsanul Haq, Chairman of the Cotton Ginners Association, stated that incorrect data from Federal Committee on Agriculture (FCA) and National Accounts Committee (NAC) has caused difficulties for stakeholders in cultivation, imports, and price determination, negatively impacting their strategic decision-making. During the past week, the local cotton market saw stable prices, but trading remained limited. Cotton deals were finalized at prices ranging from 16,700 to 17,500 rupees, depending on quality and condition. The stock of cotton with ginners is gradually decreasing. Advance deals for the new crop of 2025 - 2026 (Phutti and cotton) are taking place. In Sindh, Phutti was traded at 8,300 to 8,500 rupees per 40 kg, while cotton deals were made at 16,000 to 17,500 rupees per maund. It is said that by the third week of May, two or three ginning factories in Punjab are expected to partially start operations using Phutti from Sindh. In lower Sindh and several cotton-growing areas of Punjab, Phutti production is underway, and partial picking has also begun. The Federal Committee on Agriculture has set a production target of 10.18 million bales of cotton for the upcoming 2025-26 season. APTMA, PCGA, and FPCCI have repeatedly appealed to the government regarding the continuation of the Export Facilitation Scheme (EFS) and are persistently urging for its approval, but no decision has been made so far. Some circles remain hopeful that a solution will be proposed in the budget. Nevertheless, textile industries and PCGA cotton ginners continue to submit requests concerning EFS. FPCCI and various organizations have held meetings and press conferences, emphasizing the need for a level playing field by restoring the EFS facility, but no positive steps have been taken thus far. On the contrary, the Textile Value Added Association is demanding the continuation of EFS. A delegation comprising PCGA Chairman Dr. Jesumal Lemani, former Chairman Suhail Mahmood Haral, and APTMA Chairman Kamran Arshad met with Prime Minister Shehbaz Sharif, who assured them that the sales tax on local cotton and other taxes on by-products would be abolished in the budget. However, there is no confirmation yet on whether a final decision will be made in this regard. Meanwhile, the Pakistan Business Forum has demanded the removal of GST in the budget. Pakistan's textile industry is rapidly declining as the government has failed to address a critical flaw in the Export Facilitation Scheme for over 10 months. According to a press release by APTMA, the result is a severely flawed tax system that has rendered the local industry uncompetitive, destroyed domestic supply chains, and handed over Pakistan's textile value chain to foreign suppliers. Kamran Arshad, Chairman of the All Pakistan Textile Mills Association (APTMA), stated that the government must immediately remove yarn and fabric from the EFS import scheme. This is the only way to prevent the collapse of Pakistan's textile industry. In the provinces of Sindh and Punjab, the price of cotton per maund ranges between Rs16,000 and Rs 17,500, depending on quality and condition. Advance deals for the new crop have been settled at Rs 17,300 to Rs 17,500 per maund. The Spot Rate Committee of the Karachi Cotton Association has maintained the spot rate stable at Rs 16,700 per maund. Naseem Usman, Chairman of the Karachi Cotton Brokers Forum, said that international cotton prices remained stable. The price of New York cotton futures is currently trading between 66.00 and 70.00 American cents. According to the USDA's weekly export and sales report, sales for the 2024-25 season reached 141,400 bales. Vietnam remained the top buyer, purchasing 61,800 bales, while Turkey ranked second with 19,400 bales. Pakistan secured the third position by buying 18,700 bales. For the 2025-26 season, sales were 7,400 bales, with Honduras leading at 5,500 bales, followed by Vietnam in second place with 1,900 bales. Meanwhile, Federal Commerce Minister Jam Muhammad Kamal has informed the National Assembly that the government is developing a new textile policy, which is likely to include a proposal to exempt domestically produced cotton from the existing 11% sales tax. The minister also addressed the 30% retaliatory tariff imposed by the United States on Pakistan, which is currently suspended for 90 days. Exporters generally view this tariff as a challenge, though some believe it could also present an opportunity for Pakistani products in the U.S. market due to higher tariffs imposed on competing countries. To address these challenges, the Prime Minister has formed a steering committee and a working group tasked with conducting a detailed analysis of the U.S. retaliatory tariffs and formulating a policy response. The Commerce Ministry is collaborating with various ministries, departments, exporters, and relevant stakeholders to develop a strategy for effective engagement with US authorities. In the fiscal year 2023-24, Pakistan's exports to the United States amounted to $5.3 billion, while imports were $2.2 billion, resulting in a trade surplus of $3.1 billion, according to the Business Club. In the current fiscal year (until March 2025), Pakistan exported $4.4 billion worth of goods to the U.S. and imported $1.9 billion, maintaining a trade surplus of $2.5 billion. Pakistan's major exports to the U.S. include garments, medical equipment, and PET bottle-grade products, while key imports from the U.S. consist of cotton, iron and steel scrap, computers, petroleum products, soybeans, and almonds. Additionally, concerns have been raised that despite the start of the new cotton ginning season in the second week of May—a first in the country's history—the tax-free import of raw cotton and cotton yarn from abroad may push the entire cotton industry, including ginning, into the worst economic crisis in Pakistan's history. As a result, during the 2025-26 cotton season, the ginning and textile industry may operate at less than 50% of its full production capacity. This could force Pakistan to once again import billions of dollars' worth of cotton, along with billions in edible oil. Ehsan ul Haq, Chairman of the Cotton Ginners Forum, said that three ginning factories have become operational in Khanewal and Burewala in Punjab, while reports suggest one or two factories in Tando Adam, Sindh, will start operations by May 25. He stated that initial deals for new cotton are being settled between Rs. 17,000 to Rs. 17,500 per maund, while new phutti (seed cotton) is being traded at Rs. 8,300 to Rs. 8,500 per 40 kg. He further revealed that the federal government has allowed the import of cottonseed after nearly 50 years. However, reports indicate that some high-ranking government officials and private seed companies had previously imported cottonseed from China, Australia, the U.S., and Brazil for trial cultivation in various parts of Pakistan. These efforts failed largely due to environmental pollution caused by the lack of enforcement of crop zoning laws, which prevented the cotton crop from thriving. Haq emphasized that the current issue in Pakistan is not cotton production but its consumption. Despite the second-lowest cotton crop in history—only 5.5 million bales in the 2024-25 season—around 200,000 to 250,000 bales of unsold cotton remain in ginning factories. Additionally, cotton ginners have yet to receive hundreds of millions of rupees from textile mills for cotton sold on deferred payments. He also warned that cotton cultivation in some areas of Punjab, Sindh, and Balochistan is at risk due to canal water shortages and sudden temperature spikes, which may cause the crop to wither soon after sprouting. Furthermore, if the federal government does not abolish or domestically implement the Export Facilitation Scheme (EFS) in the upcoming budget, the country's cotton industry could face its worst economic crisis, leading to significant foreign exchange expenditures on imports of cotton, cotton yarn, grey cloth, and edible oil. The cotton sector is also troubled by the 'laughable' production figures released by the National Accounts Committee (NAC) for the past two years. This concern stems from previous miscalculations by the Federal Committee on Agriculture (FCA) regarding cotton cultivation and targets over the past decade. For the 2023-24 cotton season, the Pakistan Cotton Ginners Association (PCGA) reported total national production at 8.4 million bales, while the NAC projected an 'inflated figure' of 10.22 million bales. This discrepancy continues for the 2024-25 season, with PCGA reporting 5.5 million bales and NAC claiming 7.08 million bales. Ehsan ul Haq, Chairman of the Cotton Ginners Forum, emphasized that the incorrect statistics from the FCA and NAC create significant difficulties for stakeholders in formulating their strategies for cultivation, imports, and pricing. 'Inaccurate data could lead to a decline in cotton-based exports due to insufficient imports of raw cotton,' he warned. He stressed the importance of government institutions consistently releasing accurate cultivation and production statistics in their annual planning to help stakeholders avoid such complications. Meanwhile, both the Aptma and the PCGA have written to Prime Minister Shehbaz Sharif and launched an advertising campaign. Their message is clear: if the Export Facilitation Scheme is not abolished or its domestic application is not implemented, and if the 18 percent sales tax on cotton seed, cotton seed oil, and oil cake (khal banola) is not removed, the cotton ginning and textile sectors will find it nearly impossible to remain operational. Approximately 800 ginning factories and over 120 textile mills have already ceased operations due to this scheme. Copyright Business Recorder, 2025
