KARACHI: The overall trend showed a mixed situation in cotton prices previous week. Business volume was limited as textile mills were making cautious purchases. Most transactions were being conducted on credit.
All Pakistan Textile Mills Association (Aptma) continues to demand Export Finance Scheme (EFS) from the government but has received no response. According to Aptma, due to an uneven playing field, 40% of the industry is currently shut down. They complain that the government is prioritising foreign agriculture, industry and employment over the livelihood of Pakistani people.
According to sources, Pakistani textile sector is expecting around $3 billion worth of orders from Heimtextil. Meanwhile, preparations for early cotton sowing are under way.
Head Transfer of Technology Central Cotton Research Institute Multan Sajid Mahmood said effective measures are necessary to make cotton cultivation profitable and to implement farmer-friendly policies to revive and develop the local cotton industry.
The local cotton market experienced a mixed trend in prices over the past week. Textile spinners are primarily making deals on credit, and ginners are also selling cotton on credit, considering the current market situation.
The trading volume remained relatively low. In fact, textile spinners are importing a significant amount of cotton from abroad, while weavers are also importing a substantial quantity of cotton yarn. Even fabric is being imported.
The reason behind this is the availability of EFS facility on imported cotton, yarn, and fabric, whereas 18% sales tax has to be paid on local cotton, yarn, and fabric.
Aptma is demanding that the government abolish the EFS facility on imported cotton yarn and provide an 18% sales tax rebate on local cotton, along with the EFS facility.
The former chairman of Aptma said in a statement that approximately 30 lac bales of cotton yarn are being imported. Aptma is appealing to the government to provide a level playing field and, in particular, to provide energy at rates that are not significantly higher than those of regional countries.
Due to the costly electricity hundreds of mills have already shut down, and more mills are continuing to close. The textile sector is on the brink of collapse. If the government continues to neglect the textile sector, particularly the textile spinning sector, it will completely shut down.
Alternatively, the country will become heavily reliant on imported cotton. The Pakistan Cotton Ginners Association has released figures on cotton production in the country up to January 15th, which show that 54 lac bales of cotton were produced during this period, a 34% decrease compared to the previous year. Sources suggest that the total production was expected to be around 55 lac bales.
Efforts are under way by the government to promote cotton cultivation and increase cotton production.
A comprehensive action plan has been developed for this purpose by the government during 2025-26. Recently, the FPCCI Agriculture Task Force and PCGA held a press conference to discuss the revival of cotton in the country. They emphasised the need to eliminate taxes on the cotton business and make concerted efforts to increase cotton production.
According to the received information, the Pakistani textile sector is expected to secure approximately $3 billion worth of orders at Heimtextil.
Cotton prices in Pakistan are currently fluctuating within a certain range across different provinces. The price per maund for cotton varies depending on its quality and payment terms.
The rate of cotton in Sindh is in between Rs. 17,500 to Rs. 19,000 per maund. The price for 40 kilograms of Phutti ranges from Rs. 8,000 to Rs. 8,800.
The rate of cotton in Punjab is slightly higher, ranging between Rs 17,800 and Rs 19,000 per maund. Phutti is being sold in between Rs. 8,000 and Rs. 9,300 per 40 kilograms.
In Balochistan, cotton prices are similar to those in Sindh, with a range of Rs. 17,500 to Rs. 19,500 per maund. Phutti prices are slightly higher, ranging from Rs. 8,000 to Rs. 9,500 per 40 kilograms.
It’s important to note that the prices of products like Binnola, Khull, and oil have remained stable.
The Karachi Cotton Association’s spot rate committee has decreased the spot rate by Rs. 300 per maund, setting the new spot rate at Rs. 18,200 per maund.
Naseem Usman, the chairman of the Karachi Cotton Brokers Forum, has stated that there has been a general decline in international cotton prices. The New York cotton futures price remained between 67 and 68 US cents per pound.
According to the USDA’s weekly export sales report, three lac forty eight thousand and nine hundred bales were sold for the 2024-25 year. Vietnam topped the list by purchasing ninety four thousand and five hundred bales.
Pakistan came in second, buying seventy five thousand and four hundred bales. Turkey was third, by purchasing sixty six thousand and eight hundred bales. For the 2025-26 year, seventh nine thousand and eight hundred bales were sold.
Pakistani exporters clinched $3 billion in export orders at Heimtextil, the world’s largest textile trade fair held in Frankfurt, Germany, according to Imran Mehmood, Central Chairman of the All Pakistan Bed-sheets & Upholstery Manufacturers Association (APBUMA).
Mehmood hailed the achievement as a vital boost to Pakistan’s textile sector, emphasising that Faisalabad’s year-long textile operations depend heavily on orders secured during this event. He also highlighted the government’s ambitious plan to increase exports from $30 billion to $100 billion over the next five years, while urging for immediate measures to support the sector.
Moreover, Head of the Technology Transfer Department, Central Cotton Research Institute Multan Sajid Mahmood stated that to sustain and develop the domestic cotton industry, it is imperative to implement strategic and farmer-centric policies that ensure the profitability of cotton farming.
A critical policy initiative in this regard, particularly for the South Punjab region, would be the imposition of a complete ban on the cultivation of non-cotton crops such as sugarcane, rice, maize, and others within the cotton belt, in accordance with the principles of crop zoning.
He emphasised that instead of offering sales tax exemptions on imported cotton, a comprehensive policy should be introduced to impose a complete ban on cotton imports. Alternatively, such a ban should remain in place until locally produced cotton is available in sufficient quantity to meet the needs of the domestic industry.
Sajid Mahmood also highlighted the importance of dismantling the monopoly of middlemen in the cotton market to enable farmers to directly benefit from fair pricing. He stressed the need for a well-defined policy framework to increase the domestic cotton supply and enhance its profitability.
He further explained that policymakers must prioritize strengthening cotton research institutions and ensure their alignment with global scientific and technological advancements. He underscored that upgrading the current research infrastructure is crucial, as sustainable growth in cotton production cannot be achieved without substantial investment in research and development (R&D).
Additionally, he suggested that advanced production technologies should be adopted to align cotton cultivation with modern agricultural standards. Farmers, he noted, must receive scientifically-grounded guidance, especially in light of the challenges posed by climate change, rather than relying on traditional advisory methods. Sajid Mahmood recommended introducing comprehensive training programs to enhance farmers’ technical skills and awareness, enabling them to adopt modern farming techniques and increase yields.
He concluded by stating that while the initial implementation of a ban on imported cotton may present short-term challenges for the textile industry, this policy will contribute to the long-term sustainability of both the national economy and the textile sector. He stressed that the collective efforts of all stakeholders in the cotton value chain towards promoting local cotton will be vital for the successful formulation and implementation of a national cotton policy.
By focusing on locally grown cotton, Sajid Mahmood added, the domestic cotton supply would, within a few years, be able to fully meet the textile industry’s needs. This shift would not only reduce dependence on foreign raw materials but also lead to significant savings in foreign exchange, thereby stabilizing and growing the cotton economy on a strong foundation.
However, the Aptma has demanded that the government take action against the factors that are crippling the non-operational industry. 40% of spinning mills are already shut down. The entire cotton economy is at risk. Spinning and weaving sectors are collapsing due to the imposition of an 18% sales tax on domestic inputs for exports, while imported inputs enjoy duty-free and sales tax-free status.
There is a strong incentive to import as exporters who purchase local inputs face a delay of over six months in sales tax refunds and only receive a partial refund of 70%.
The significant increase in intermediate goods imports has resulted in billions of dollars of lost investments, thousands of job losses, and a drain on foreign exchange reserves. To address this, a fair sales tax model should be implemented. A level playing field demands that the Export Facilitation Scheme (EFS) for imported cotton, yarn, and other intermediate inputs be subjected to the same sales tax regime as locally produced goods.
By adopting India’s graduate sales tax rate model, we can reduce corruption and, paradoxically, Pakistan is promoting foreign agriculture, industry, and employment at the expense of its own people’s livelihoods.”
Copyright Business Recorder, 2025
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