The International Cotton Association (ICA) has declared 84 textile mills in Pakistan as defaulters due to their failure to honor their cotton procurement agreements, according to the Cotton Ginners Forum chairman, Ahsanul Haq. This development means that these mills are now barred from importing cotton from global markets, which is a significant setback for the country’s textile industry.
The decision comes in the context of a sharp decline in Pakistan’s cotton production. According to the Pakistan Cotton Ginners Association, the country produced 5.2 million cotton bales by the end of November 2024, a 33% decrease compared to the same period last year. Despite expectations that this reduction would drive up prices in the local market, the opposite occurred—prices dropped. Textile mills opted to import cotton and thread from international markets instead, partly due to the imposition of an 18% sales tax on their purchases.
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This situation has raised concerns among cotton ginners and growers, as the fall in prices could further discourage local production. Ahsanul Haq urged the government to withdraw the 18% sales tax on cotton and thread purchases, as a way to support the local cotton industry and reduce the need for foreign exchange outflows through imports. The industry fears that without intervention, Pakistan’s cotton sector could face more significant challenges in the future.
