The Federal government is likely to withdraw restrictions on import of cotton from December 1, 2017 aimed at allowing textile industry to import raw material at a competitive price, well-informed sources told Business Recorder. The sources said the country's cotton requirement is around 1.5 million bales but Cotton Crop Assessment Committee (CCAC) estimates cotton production would be around 12.6 million bales against the initial estimate of 14.04 million bales for the current season (2017-18).
"Since Pakistan is deficient in cotton, we have recommended to the Economic Co-ordination Committee (ECC) of the Cabinet to allow cotton imports to meet industry's requirement," the sources added.
Cotton crop target for the year 2017 was set at 3.11 million hectares (7.68 million acres) with production of 14.04 million bales. About 13.9 per cent higher cotton sowing of 2.753 million hectares (6.803 million acres) was achieved during the current season with major increase in the Punjab province (5.300 million acres) compared to last year. But the target set for the current season was missed as decline in cotton sowing was recorded in the Punjab which is the major cotton producing province. The Punjab which produces about 70 percent of the total cotton has been hit hard as 5.3 million acres have been covered against the target of 5.97 million acres. It is 88 percent of the target for current season but higher compared to 4.48 million acres of the previous season.
All Pakistan Textile Mills Association (APTMA) representing 30 - 35 percent textile capacity has already been impaired and a continuity of these restrictions would prove detrimental across the textile value chain. APTMA Punjab Chairman Ali Pervaiz has urged the government to immediately notify withdrawal of 4 percent customs duty and 5 percent sales tax and other non-tariff restrictions on import of cotton to enable the industry to meet its export commitments.
The sources said, in a meeting with the prime minister on October 13, 2017 Federation of Pakistan of Chambers of Commerce and Industry (FPCCI) and All Pakistan Textile Mills Association (APTMA) discussed multitude of issues being faced by the exporters and facilitation provided by the government. The prime minister desired that Ministry of Commerce and Textile in consultation with the textile association come up recommendations in order of preference, to facilitate long-term export growth. The textile associations were requested to provide medium to long term recommendations, especially on cost of doing business to create level-playing field for textile manufacturers and exporters vis-à-vis competitor countries.
According to industry sources, restrictions on import of cotton from India and Brazil have already spiked the price of local cotton to above Rs 7000 per maund as the country is going to harvest short crop for the fourth consecutive year. In comparison, Indian cotton is available at around Rs 6000 per maund.
During the 7th meeting of Federal Textile Board held on 4 November, 2017 under the chairmanship of Minister for Commerce and Textile the recommendations of different textile associations were discussed in detail and after due deliberations it was decided to forward agreed recommendations to the prime minister which have already landed at the prime minister's office.