KARACHI: The cotton market continues to face a bearish trend, with trading activity remaining limited. Internationally, prices at the New York Cotton Exchange have also dipped, exacerbating the crisis for local textile spinners. Economists have warned that the spinning sector could face a complete collapse if urgent government-led reforms are not implemented.
Industry sources report that challenges for textile spinners are intensifying daily. Spinning units have demanded the government ensure a “level playing field” between cotton imports and local production. Dr Jesumal Lemnai, Chairman of the Pakistan Cotton Ginners Association (PCGA) stated that the government and the Special Investment Facilitation Council (SIFC) have assured the removal of taxes on the ginning industry in the upcoming budget.
In a bid to boost cotton production, the PCGA has written a letter to Prime Minister Shehbaz Sharif, urging the formulation of a uniform policy. Meanwhile, the recent data shows a 16% increase in textile exports, though internal industry challenges continue to overshadow these gains.
Cotton ginners in Rahim Yar Khan have strongly protested against new Federal Board of Revenue (FBR) taxes, claiming the levies are unaffordable. “Even if we sell our factories and homes, we cannot pay these taxes,” one of the ginners stated.
On the cultivation front, early cotton sowing has begun in Sindh and Punjab. Chairman Cotton Ginners Forum Ehsanul Haq noted that current weather conditions remain favourable for the crop.
Head Transfer of Technology Pakistan Central Cotton Committee Sajid Mahmood emphasised that the All Pakistan Textile Mills Association (APTMA) must take concrete steps to revive and develop cotton production. He stressed, “Research and development institutions, particularly the Pakistan Central Cotton Committee (PCCC), require full financial and technical support to introduce disease-resistant cotton varieties and modern production technologies.”
During the past week, the local cotton market experienced an overall decline in prices. Textile spinners are increasingly relying on imported cotton, leading to reduced demand for local cotton and consequently limited trading activity. The textile sector continues to demand that the government lower energy costs and extend the Export Finance Scheme (EFS) facility to local cotton to ensure a level playing field. However, no progress has been made on these demands so far. It is anticipated that a decision on the matter may be included in next year’s budget, with reports suggesting the Special Investment Facilitation Council (SIFC) is also taking an interest in the issue. Ginners currently hold a stockpile of around 400,000 cotton bales and are under stress due to the lack of buyers.
Cotton cultivation has commenced in several cotton zones across the country, with extensive planting under way in many districts of Sindh, including Badin, Thatta, Hyderabad, Mirpur Khas, Sanghar, and Umer Kot. Meanwhile, partial cultivation has begun in Punjab’s districts such as Bahawalnagar, Rahim Yar Khan, Vehari, Sahiwal, and Bahawalpur. However, concerns persist that cotton cultivation may fall short of expectations this year due to a significant drop in the prices of cotton and cottonseed in local market. The Federal Committee on Agriculture has yet to finalise production and cultivation targets for Cotton Year 2025-26. In contrast, the USDA has reported that Pakistan’s total cotton production during Cotton Year 2024-25 is projected to be 27% higher than previous estimates.
Chairman of the Cotton Growers Forum, Ahsan-ul-Haq, highlighted that the FCA typically sets cotton cultivation and production targets in the first week of February each year. However, this year’s FCA meeting has not been held, potentially creating challenges for cotton stakeholders in strategising due to the absence of clear targets.
They mentioned that due to higher-than-expected temperatures, cotton cultivation has begun in several cities across Pakistan, and in the absence of rainfall, the cotton crop could significantly improve. However, concerns are being raised about a potential decline in cotton cultivation this year due to record imports of cotton and cotton thread resulting from sales tax exemptions, which have caused domestic prices of cotton and cottonseed to fall far below expectations. This situation could force Pakistan to import billions of dollars worth of cotton as well as edible oil in the coming year.
In Sindh province, the price of cotton is currently between 16,500 to 17,500 rupees per maund, depending on quality and payment conditions, while in Punjab province, it ranges from 17,200 to 17,700 rupees per maund. PRIMARK cotton settled at a price of 18,800 rupees. Prices for Banola, oil, and oilcake remained relatively low. A further slowdown in business activity is anticipated during the month of Ramadan.
The Karachi Cotton Association’s Spot Rate Committee has kept the spot rate stable at 17,500 rupees per maund.
Nasim Usman, Chairman of the Karachi Cotton Brokers Forum, stated that international cotton prices remained weak, with New York cotton futures trading between 66 to 67.50 American cents per pound. According to the USDA’s weekly export and sales report, 312,500 bales were sold for the 2024-25 season. Vietnam topped the list by purchasing 109,400 bales, followed by Pakistan with 64,800 bales, and Turkey ranked third with 51,000 bales. For the 2025-26 season, 34,300 bales were sold, with Bangladesh leading by purchasing 33,000 bales, while Vietnam secured the second position with 1,300 bales.
Meanwhile, Dr Jesumal Lemnai, Chairman PCGA, stated that the government and the Special Investment Facilitation Council (SIFC) have assured the abolition of the 18% sales tax imposed on the ginning industry in the upcoming fiscal year 2025 budget. This development is being hailed as a major success for the ginning industry and Pakistan’s cotton value chain, which has faced financial challenges for several years.
According to Lemnai, the implementation of the sales tax had plunged the ginning industry into a severe crisis, causing financial strain not only on ginning units but also harming cotton farmers. The tax led to increased prices of cotton by-products (cottonseed, oilcake, and cottonseed oil), adversely impacting the textile, livestock, and related industries. This situation resulted in reduced cotton production, a weakened agricultural economy, and issues such as the need to import billions of dollars’ worth of cotton.
A significant meeting of the Pakistan Cotton Ginners Association (PCGA) Rahim Yar Khan Chapter was held at the Chamber of Commerce, where serious concerns were raised over notices issued by the Federal Board of Revenue (FBR) demanding billions of rupees in sales tax payments from cotton ginners. Most participants reported receiving directives to pay millions in sales tax on products such as cottonseed, oilcake, and cottonseed oil, despite not having sold these goods yet. A six-member committee was formed during the meeting to negotiate with the FBR.
Ginners also expressed concern over the exemption of sales tax on imported cotton while imposing it on locally produced cotton, demanding the elimination of the Export Finance Scheme (EFS). Attendees at the meeting included Malik Abdul Karim, Chaudhry Wasim, Chaudhry Zahid, Chaudhry Sultan, Mian Saqib, Chaudhry Waqar, Sajid Munir, and Ahmed Musa.
Additionally, Pakistan’s textile and garment exports saw a 15.85% increase in January 2025 compared to the same period the previous year. A rising trend in textile exports has been observed since August, which exporters attribute to growing global demand and supply chain disruptions in Bangladesh. This situation has led to an increase in orders for Pakistani garments.
Meanwhile, Sajid Mahmood, Head of the Technology Transfer Department at the Central Cotton Research Institute, Multan, stated that the federal and provincial governments are aligned in their commitment to promoting and developing the cotton sector in the upcoming season. To enhance cotton production, the Ministry of National Food Security and Research, in collaboration with provincial governments, is implementing various initiatives. Partial sowing has commenced in Punjab’s key cotton-growing districts, including Bahawalnagar, Rahim Yar Khan, Vehari, Sahiwal, and Bahawalpur. The Punjab Agriculture Department has set a target of approximately 400,000 acres for early cotton sowing in the Multan division. However, agricultural experts indicate that weather conditions are not yet fully conducive for planting, with improvements expected by the first week of March. Meanwhile, early cotton sowing is progressing rapidly in Sindh, particularly in the districts of Badin, Thatta, Hyderabad, Mirpurkhas, Sanghar, and Umerkot.
The Pakistan Central Cotton Committee (PCCC), in collaboration with the Punjab Agriculture Department, is actively engaging in various seminars and has launched an extensive awareness campaign to guide and train cotton farmers. Sajid Mahmood underscored the need for the All Pakistan Textile Mills Association (APTMA) to take decisive measures for the revival and sustainable development of the cotton industry. This includes providing comprehensive financial and technical support to research and development institutions, particularly the Pakistan Central Cotton Committee (PCCC), to facilitate the introduction of improved cotton varieties, enhance resistance to diseases, and advance modern production technologies.
He also noted that the Pakistan Cotton Ginners Association (PCGA) and the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) are actively advocating for cotton sector revival, which is a promising development. While there is optimism that this year’s cotton production will surpass last year’s levels, he stressed that achieving this objective requires coordinated and proactive efforts from all key stakeholders.
Copyright Business Recorder, 2025
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