Govt allows duty-free cotton import till July 31

LAHORE: The government has silently granted extension to duty-free import of cotton by another month, contrary to the demands of most of the stakeholders, sources said.

The Economic Coordination Committee (ECC) of the Cabinet last week accorded permission to give total exemption of 11 percent duty and taxes on cotton import. This, the sources added was unlike the previous year’s practice, and favoured the textile lobby.

The recommendation came from Abdul Razak Dawood, advisor for textile, commerce, industry and production, and investment. The government silently gave the extension on June 30, 2019, and contrary to previous practices, did not announce the formal decision after the ECC meeting.

The decision was against the recommendations of the non-partisan Parliamentary Committee on Agriculture. In its unanimous recommendations, the Parliamentary Committee asked for restoration of regulatory import duty on cotton to prevent its massive import and dumping, and to enable farmers receive international parity price.

Ministry of National Food Security and Research also supported withdrawal of exemption given on cotton imports to give incentives to local farmers to grow the silver fibre on greater area. Almost all farmer bodies vehemently oppose the import of cotton right in the middle of cotton cultivation season.

Pakistan Kissan Ittehad (PKI) has forcefully backed domestic production of cotton by giving incentives to local farmers. The unabated import of cotton would ruin local growers, as price of lint would crash in the market, warned PKI.

The price of fresh cotton was already below Rs3,000/maund in Sindh, much lower than the due price, it added. The decision might discourage growers from tending their standing crops against pest attacks, which could also impact total output of the silver fibre.

Cotton ginners were also unhappy with the inconsistent policy for dealing with the cotton market. Ihsanul Haq, senior member of Pakistan Cotton Ginners Association (PCGA) said frequent changes in policy for cotton trade made this business riskier, which was always unwelcomed by ginners.

PKI President Khalid Khokhar said the regulatory measures being taken by the federal government were against its policy of increasing cotton production in the country.

Textile bodies, including the All Pakistan Textile Mills Association (APTMA) have hailed the federal government's decision to continue the policy of duty-free cotton import.

APTMA spokesman said cotton import was necessary for meeting the requirement of local industry. He brushed aside the notion that farmers would be adversely affected from the imports. “Local cotton is yet to start arriving in the market,” he added.