Pakistan’s textile mills want duty and sales tax exemption on imports of raw and ginned cotton, considering the shortfall in the local cotton output.
The last budget had imposed sales tax at five per cent on the import of raw and ginned cotton. On the other hand, local cotton remained exempt from sales tax.
Pakistan has to import around 25 per cent of its cotton requirement. This is mainly of long staple and contamination-free cotton, which is not available in the country. This cotton is used to manufacture high value yarn and in turn high value added products, which are mainly exported in one form or another.
Due to the crop failure this year, the industry had to import more cotton as compared to the previous year; therefore, it says import of raw cotton should be exempt from duty and tax. Due to the three per cent duty, the cost of production has further increased as the prices of local cotton also increased in tandem with imported cotton prices.
There is also a demand that the duty on import of manmade fibers such as polyester, viscose, acrylic and nylon should be reduced to zero.
The industry consumes around 16 million bales annually, whereas the total production of cotton in Pakistan is around 13 million bales.