Pakistan's cotton imports during the current season have reached a record high at around 5.5 million bales with import bill touching around $1.5 billion.
The country's cotton production is once again on a downhill course due to multiple factors, including climate change and heavy taxation on cotton and yarn buying.
The heavy taxation led to lower production because if textile mills import cotton and cotton yarn, the taxes are zero while if they buy it locally, the millers have to pay 18% tax on domestic cotton and yarn.
Sources in the cotton industry revealed to Nukta that the shortfall would be higher compared with the government’s target which was revised a number of times during the season. The season commenced from the target of 10.8 million bales, which was later revised to 6.5 million bales.
The higher target turned the textile millers a bit optimistic and they resumed marketing their products. Moreover, with political chaos in Bangladesh, some orders diverted to Pakistan, increasing the textile shipments.
In the six months ended December 31, textile exports fetched nearly $9 billion whereas in the same period last year, shipments made amounted to $8.2 billion.
The production of cotton has declined sharply as per the latest report from Pakistan Cotton Ginners Association.
According to the PCGA data, cotton production was around 5.489 million bales compared with 8.2 million bales harvested in the same period last year.
This forced the textile millers to opt for imports, and so far nearly 1.56 million bales have arrived valuing $490 million whereas contracts worth 3.5 million bales have been finalized.
This season there is a likelihood that the imports of cotton bales might reach 5.5 million bales, highest in the country's history.
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