PBF calls for cotton tax relief, SME lending in pre-budget talks

KARACHI: A delegation from the Pakistan Business Forum (PBF) has urged the government to provide targeted relief for the agricultural sector, including the removal of sales tax on domestic cotton and reduced import duties on cotton ginning machinery, as part of the upcoming federal budget.

At a meeting with Minister for National Food Security Rana Tanveer Hussain, the delegation called for measures to reduce cultivation costs and boost local cotton production, warning that sustainable economic growth is not achievable without direct support for agriculture.

“The government must take concrete steps to lower the cost of cultivation,” said one delegate, pointing to tax relief on fertilisers and an end to the 18 per cent general sales tax on domestically produced cotton.

The minister indicated broad alignment with the proposals, noting that his ministry is already working to remove the GST on local cotton and resolve longstanding Cotton Cess liabilities that have constrained the Central Cotton Committee’s funding.

“We are also considering restrictions on tax-free yarn and fabric imports under the Export Facilitation Scheme to protect local producers,” he said. “This year’s target is to produce 10 million cotton bales, and we are committed to supporting farmers through the budget.”

The delegation also recommended decentralising agricultural research by deploying seed varieties and technologies developed by the Pakistan Agricultural Research Council to local levels, and bridging the gap between federal research and provincial implementation.

Separately, the group welcomed the easing of cotton seed imports and called for legislation to encourage banks to increase lending to small and medium-sized enterprises, saying current reluctance to finance smaller firms is hindering industrial growth.