International Cotton Association declares 84 Pakistani textile mills defaulters.

Karachi

The International Cotton Association has declared 84 major Pakistani textile mills as defaulters. Due to default, these textile mills cannot enter into cotton purchase agreements with international markets.

Despite the increase in cotton and cotton yarn imports by local textile mills due to sales tax exemption on cotton and cotton yarn imports in Pakistan and the local cotton production being significantly lower than the set target, the trend of continuous decline in cotton and cotton prices is prevailing.

This is increasing anxiety among cotton ginners and cotton farmers, which has raised concerns of further reduction in cotton sowing next year.

Chairman Cotton Ginners Forum Ehsan-ul-Haq told Express that due to non-fulfillment of purchase agreements for imported cotton, ICA has declared 84 major textile mills of Pakistan as defaulters in the last few years, due to which these mills can no longer purchase cotton from any country in the world.

He said that according to the data released by the Pakistan Cotton Ginners Association till November 30, 2024, cotton production in Pakistan is around 5.2 million bales, which is a record 33 percent less than the same period last year.

In view of these facts, there were expectations of a significant increase in the prices of cotton and cotton yarn in Pakistan, but the unexpected record import activities of cotton and cotton yarn from foreign countries by textile mills have not only created a trend of continuous decline in cotton prices, but also the local textile mills are continuously showing disinterest in purchasing local cotton due to the imposition of 18% sales tax, thereby creating a trend of continuous decline in the prices of cotton and cotton yarn.

Due to this situation, a wave of concern is being seen among cotton ginners and farmers, which has raised fears that cotton cultivation will also decrease further next year.

He said that the federal government should immediately withdraw the 18% sales tax imposed on the purchase of cotton and yarn from within the country so that the income of Pakistani farmers and cotton ginners can improve due to the reduction in imports of cotton and cotton yarn and the saving of valuable foreign exchange transferred to foreign countries.