Cotton yarn prices record sudden hike

FAISALABAD: The prices of cotton yarn in local market have recorded a sudden increase of Rs1,000 per bag.

This increase was the natural outcome of the decision of ECC (Economic Coordination Committee) that has deferred the proposal to withdraw custom and regulatory duties on raw cotton, 100 per cent cotton yarn and polyester import by the value-added sector for export purposes.

Syed Zia Alumdar Hussain, president Faisalabad Chamber of Commerce and Industry (FCCI), said that Pakistan requires approximately 14 million cotton bales for its domestic consumption.

The government had earlier estimated its production this year at 14.78 million bales but it was revised to 10.78 million due to different reasons.

Out of this yield, 9.78 million bales have already been purchased by the ginning factories while the textile mills are expecting acute shortage of raw cotton and 100 per cent cotton yarn in the coming months, fomenting a spree of speculative buying.

To bridge the production gap, duty-free import of raw material was imperative but the ECC has deferred the decision to withdraw custom and regulatory duties.

The FCCI president said that earlier the exporters were allowed duty free import of cotton but the zero per cent slabs was withdrawn in 2014-15, clamping one per cent custom duty along with five per cent sales tax.

He urged the government to take immediate steps to withdraw all duties on raw material imported for re-export purposes. Shortage of domestic cotton had already put a negative impact on unorganised power loom sector that is fighting for its survival, he cautioned.