KARACHI: The rate of cotton decreased by Rs 1,000, while the rate of Phutti decreased by Rs 2,000, Banola by Rs 1,000 and oil by Rs 5,000.
However, textile exports have witnessed a decline of 20 percent. There is recession in both local and international textile markets.
However, cotton production is expected to increase if the weather conditions remain favourable. Textile exporters have rejected the Reforms & Revenue Mobilization Commission’s (RRMC’s) report. Chairman Apparel Forum Javed Bilwani termed these proposals as last nail in the coffin of textile industry.
All Pakistan Textile Mills Association (APTMA) has congratulated Chief Minister Punjab on the successful cotton campaign. The KCA emphasized the need of protecting the interests of all stakeholders of the cotton trade in its budget proposals.
In the local cotton market, the business of new crop cotton has started during the last week of May. At present, about 15 ginning factories in Sindh and Punjab have partially started business. The arrival of Phutti is also increasing day by day.
In the past few days, there were rains in most of the cotton-producing areas of Sindh and Punjab. There were also hailstorms in many places, but currently there are no reports of damage to the cotton crop. The rain is said to be beneficial for the crop. If there is more rain, there may be a need for re-cultivation of cotton in some places.
Ginners have a stock of about one lac bales of old cotton which is being sold from time to time. Currently, it is too early to say anything about the cotton crop. At present, 70 to 80 percent of the crops have been cultivated in many areas. The relevant government departments are active. The situation of the textile sector; however, is not good. The industry is facing the issues of sales tax refund gas, energy, interest rate and non-issuance of refund. Moreover, textile sector is also badly affected due to huge financial crisis in the market and recession in the international markets and fluctuations in the value of the dollar. Textile sector is continuously appealing to the government to solve their problems immediately but the government is continuously adopting delaying tactics.
The rate of new crop of cotton opened at Rs 21,000 per maund but after decreasing by Rs 1,000 per maund closed at Rs 20,000 per maund. The rate of Phutti opened at Rs 11,000 per 40 kg and after that decreased by Rs 2,000 closed at Rs 9,000. The rate of Banola after opening at Rs 4,500 decreased by Rs 1,000 closed at Rs 3,500. The rate of oil after opening at Rs 18,000 decreased by Rs 5,000 and closed at Rs 13,000.
The Spot Rate Committee of the Karachi Cotton Association kept the rate at Rs 20,000 per maund.
Chairman Karachi Cotton Brokers Forum Naseem Usman told that fluctuation was seen in the rate of Future Trading of cotton in international markets. According to the weekly export and sales report of 2022-23, two lac and sixty seven thousand and eight hundred bales were sold. China was at the top by buying two lac and twenty one thousand and seven hundred bales. Turkey bought 20,800 bales and came second. Vietnam bought 13,700 bales and ranked third.
Seventy sic thousand sixty bales were sold for the year 2023-24. Turkey was at the top by buying 43, 500 bales. El Salvador came second with 20,900 bales. China bought 8,800 bales and came third.
Exporters in Pakistan have expressed reservations about a proposed tax on late realised amounts put forth by the Reforms and Revenue Mobilisation Commission (RRMC) for the fiscal year 2023-24. The proposal suggests imposing an income tax on exporters who fail to bring in foreign currency within a specified time period, leading to gains on foreign exchange.
The RRMC’s recommendations to change the current Final Tax Regime of Exporters to a Minimum Tax Regime and impose additional taxes on foreign exchange income have been criticised by Muhammad Jawed Bilwani, Chief Coordinator of the Value-Added Textile Association Forum. Bilwani underscored that these recommendations were made without consulting exporters and other relevant stakeholders. He argued that applying normal tax regulations to exporters would discourage exports and prove futile in achieving the objective of addressing the trade balance.
He also criticised the chairman of RRMC, asserting that he lacks knowledge about the export industry and tends to favour certain business circles. He questioned whether the government should rely on consultants and advisors in these challenging times or listen to the actual stakeholders who understand the intricacies of the export sector.
Bilwani drew attention to the alarming situation where national exports are not increasing, revenues are not growing, but debts and liabilities continue to rise. He pointed out the disparity between a few favoured businessmen whose businesses and exports have flourished while small and medium sized (SME) textile exporters struggle for survival without representation or a voice in the government. The country’s textile exports have decreased by 20% in the month of May in the current financial year, which is 1.31 billion dollars. While in the same period of the last financial year, the volume of exports has been 1.64 billion dollars, according to the data of the current financial year.
According to statistics, exports of textile products went decreased by 15% to 15 billion dollars in the eleven months of this financial year; whereas in the same period of last financial year, exports were 17.61 billion dollar.
According to the data, in the first three months of the current fiscal year, the exports were moving in the right direction and were one percent higher than the figures of the previous fiscal year, but then the textile exports started to decline. All Pakistan Textile Mills Association (APTMA) has greets the Chief Minister of Punjab Syed Mohsin Raza Naqvi on the remarkable accomplishment of the cotton campaign in Punjab. APTMA, representing the textile industry of Pakistan, appreciates the timely efforts made by the Government of Punjab including Commissioners and Punjab Agriculture Department.
The recently concluded cotton campaign in Punjab has resulted in the sowing of over 4.4 million acres of land, a significant increase in the figures of 3.67 million acres from the previous year. This campaign is projected to yield 7.35 million bales of cotton, representing a substantial 143 percent increase compared to the corresponding year’s production of 3.03 million bales.
Pakistan’s textile sector and the country as a whole will be significantly impacted by the success of Punjab’s cotton campaign. APTMA acknowledges Government of Punjab’s unrelenting commitment to recovering cotton output and securing Pakistan’s place as a leading player in the global textile market. It not only ensures our self-sufficiency but also reduces Pakistan’s reliance on import of cotton – saving $1.5 billion in import bills and strengthening the nation’s economy.
Patron-in-Chief of APTMA, Dr Gohar Ejaz, appreciates PM Shehbaz Sharif and Government of Punjab for their vision and commitment to the welfare of the farmers and the textile sector – instrumental in encouraging and assisting cotton farmers during the campaign by providing an intervention price of Rs 8500/mounds, timely crop advisories, and necessary inputs that have set the path for a sustainable future for Pakistan’s textile and agricultural s
Head Technology Department of Central Cotton Research Institute Multan Dr Sajid Mahmood in its long article has given positive suggestions to increase cotton production. He mentioned the key role of Pakistan Central Cotton Committee in cotton production campaign. He also said that APTMA has not paid about 4 billion rupees in the head of Cotton Cess for many years for Research and Development. This has also effected the cotton production. He said 1100 employees were not given salaries for the last few months. He said there was no research and development since APTMA has not given Cess. APTMA played an important role in the continuous decline of cotton production. The Karachi Cotton Association (KCA) on Friday urged upon the government that the policy of Free Trading in Cotton should be continued in the coming years without any change or modification to safeguard the interests of all segments of the cotton trade.
In its budget proposals sent to finance ministry KCA also urged upon the Government to direct the Commercial Banks to open necessary Letters of Credit (L/Cs) expeditiously on the request of importers of raw cotton, i.e., local textile mills so that they may be able to meet their requirement of imported raw cotton timely.
Government has been following the policy of free trading in cotton, i.e., free export and import of cotton without any duty and quantitative or qualitative restrictions for the past several years. This policy has been designed to safeguard the interests of all segments of the cotton trade.
Due to acute shortage of cotton resulting in drastic decline in cotton production in the country, the local textile industry is compelled to import raw cotton from abroad to meet its requirement of basic/ primary raw material but the necessary Letters of Credit (L/Cs) are not being opened timely by the Commercial Banks.
The KCA; therefore, urges the government that export of raw cotton should be allowed zero-rated by withdrawing 18% GST at ginning stage. In order to ensure efficient marketing of cotton crop and safeguard the interest of the cotton growers, as well as, the economy of country otherwise export of cotton would be seriously hampered in anticipation of good crop in 2023-24 and the exports earnings of the country would be badly affected which could not be afforded in the economic circumstances prevailing in the country.
For exporters at present, 18% GST on raw cotton is levied at ginning stage that is refundable at exports stage to the exporters of raw cotton The exporters of raw cotton make their shipments within four to six weeks of the procurement of raw cotton from the ginneries and are thus in a position to rollover their capital several time in a year.
Due to considerable delay in refund of Sales Tax amount to the exporters of raw cotton, considerable working capital of exporters of raw cotton gets stuck-up for a long period that not only restrict their turnover but it also affects their ability to make further exports.
The KCA also urged upon the government to issue necessary instructions to the authorities concerned to expedite settling the Sales Tax Refund claims of the cotton exporters. The Association also proposed to allow import of certified cotton seed from abroad. The exporters of raw cotton are facing serious liquidity problems due to considerable delay in refund of Sales Tax to them thereby adversely affecting their capability to export raw cotton further due to liquidity crunch resulting in loss of valuable foreign exchange for the country. In some cases, the claims of cotton exporters regarding refund of Sales Tax are pending for 02-03 years. Due to stuck up of huge finances the exporters of raw cotton with the government, the ability of the cotton exporters to make more export sales contracts is badly affected. The government should allow import of cotton from the African continent including Mali, Chad, Mozambique and Senegal. Due to drastic decline in cotton production in the country in the last four to five years, the local textile mills are compelled to import cotton from abroad to meet their requirement of raw cotton.
Copyright Business Recorder, 2023
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