Govt asked to abolish duty withdrawal on cotton import

MULTAN: Domestic lint and cotton rates are likely to decline considerably following the Economic Coordination Committee’s withdrawal of tax and duty on the import of cotton.

However, the ECC did not abolish 40 per cent Regulatory Duty on the import of sugar, said the cotton stakeholders while talking to The News on Wednesday. The unsold stock of 17.5 million bales (worth more than Rs50 billion) is lying with the ginners besides a huge stock which is lying with the growers for disposal, said Amanullah Qureshi, former chairman of PCGA.

Three stakeholders involved in the cotton trade, including the growers and the ginners, are experiencing extreme helplessness while the only beneficiaries are the textile millers. The millers would have to make deals with the ginners at desired rates under the threat of importing the cotton on comparatively low prices from China, India or Afghanistan, the ginners observed.

Anxiety has prevailed among the growers and the ginners after the ECC approved the withdrawal of four per cent customs duty, additional customs duty and five per cent sales tax on the import of cotton with effect from February 1 till June 30, 2019, to ensure sufficient supply of cotton to the industry.

Pakistan Cotton Ginners Association chairman Mian Mehmood Ahmed said that the ECC decision was likely to affect the cotton production in 2019-20, which has a target to produce 15 million bales due to uncertain, unguaranteed procurement and disposal of cotton bales. The country has suffered a huge loss of Rs500 billion in the past years due to less production of cotton, said the financial experts.

Cotton stakeholders observed that under these circumstances, allowing the cotton import would be tantamount to slaughtering the growers and ginners who heave a sigh of relief after the cotton prices were increased considerably.

The cotton ginning industry has fiercely opposed the duty-free import of Indian cotton, saying it will have destructive effects on Pakistan’s economy. PCGA chairman Mian Mehmood Ahmed said that the ECC had determined winding up cotton trade from the country and the ECC had become the club of sugar millers.

The withdrawal of import duty/tax is not fair and a biased decision. The ECC is only protecting the sugar mills because the 40 per cent Regulatory Duty on sugar import had not been withdrawn, giving an edge to the millers to sell sugar at their desired rates.

They saw no justification of withdrawal of tax/customs duty at the cost of Pakistan’s farmers, arguing that the import of fibre via land or sea was not in the interest of the national economy.

They demanded Prime Minister Imran Khan not to notify the ECC decision of allowing tax/duty-free cotton import. Grower Fiazul Hassan Butha said that cotton harvest had dropped 30 per cent last year and if appropriate measures were not taken, the situation could deteriorate further which would affect the local output.