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The International Cotton Association (ICA) has officially labeled 84 textile mills in Pakistan as defaulters due to their failure to honor procurement agreements. This decision has significant ramifications, as these mills will now be barred from importing cotton from international markets.
Ahsanul Haq, Chairman of the Cotton Ginners Forum, stated that the International Cotton Association’s decision is a consequence of the textile mills’ persistent violations of their procurement obligations. This ruling will significantly hinder their capacity to procure cotton from international sources, thereby complicating their operational processes.
As reported by the Pakistan Cotton Ginners Association, the nation produced 5.2 million cotton bales by the conclusion of November 2024, representing a 33% decline in comparison to the corresponding period in the preceding year.
Despite expectations that cotton prices would rise due to the lower production, prices have instead fallen. This unforeseen decrease is ascribed to textile mills choosing to import cotton and fibers after the implementation of an 18% sales tax on domestic textile manufacturers.
The decline in cotton prices has elicited apprehensions among ginners and cultivators, who are concerned that this trend may further impede cotton production in Pakistan. To address the matter at hand, Ahsanul Haq has implored the government to reevaluate the imposition of the 18% sales tax on cotton and yarn. He underscores that this action is essential for bolstering the domestic cotton industry and mitigating the outflow of foreign exchange resulting from imports.
