MULTAN (A.S.Qamar) A feasible and long standing National Cotton Policy (NCP) will be framed jointly by All Pakistan Textile Mills Association (APTMA) and Pakistan Cotton Ginners Association (PCGA) which would protect the interests of growers, ginners, spinners and Textiles besides strengthening the country's economy, stated PCGA Chairman Dr. Jesu-mal, and APTMA Chairman Kamran Arshad while addressing a joint press conference at PCGA House on Saturday. They said that we have joined hands in the larger national ineterest to yank the country out of cotton crisis which caused closure of industry and rendering thousands of workers jobless. They vowed to bring Pakistan Kisan Ittehad and other growers organisations on board to achieve this objective.They urgently called on the government to create a level playing field for local raw materials and intermediate inputs for export manufacturing, as inaction on the Export Facilitation Scheme (EFS) has pushed the country’s spinning industry to the brink of collapse.Dr. Jesu Mal said that more than 800 ginning factories have so far been closed similarly 124 spinning mills are inoperable .They said that Government should have approve a National Cotton Policy (NCP)unanimously finalised by all stake holders i.e Growers, Ginners, Spinners, Power loomers and Textile related industry. Due to the policies of the government, more than 120 spinning mills have been closed-representing nearly 40% of total production capacity —have already shut down, while the remaining mills are barely operational, running at less than 50% capacity and more than 800 ginning factories are also shut.They further said that the consequences will not be confined to spinning alone — the entire textile value chain including growers and ginners is at risk, with weaving and other downstream sectors already experiencing similar distress. If the reckless sales tax regime — imposing an 18% sales tax on local supplies for export manufacturing while keeping imports sales tax-free—is not immediately reversed, Pakistan’s textile manufacturing base will soon be replaced entirely by imports, leading to an industrial and economic disaster of unprecedented scale. Importantly, this is a non-revenue measure that achieves nothing except facilitating imports at the expense of local industry.
They asserted that by allowing duty-free and tax-free imports while imposing an 18% sales tax on local inputs for export manufacturing, the government has left domestic producers, especially thousands of SMEs, with no choice but to shut down. Exporters face a strong incentive to switch to imports. Explaining the details, leaders of two associations said procuring domestic inputs, exporters must first pay 18% sales tax and file for a return after a 6-10-month production cycle. They then face an additional 6-month wait for the refund, and even then, only around 70% of the due amount is refunded, with the rest indefinitely deferred for manual processing, on which no progress has been made for the last 4-5 years. This process strangles cash flow, pushing businesses toward using imported inputs. The government should immediately withdraw the EFS scheme and provide business opportunities on an equal and equitable basis. On this occasion, FPCCI Agriculture Committee Chairman Sham Lal Manglani, former Chairman Haji Muhammad Akram, Chaudhry Waheed Arshad,Salman Maqsood, Sohail Mahmood Haral were also present. The government should immediately abolish the implementation of domestic cotton and cotton yarn tax. Sales tax and duties should be implemented on imported cotton, cotton yarn and cloth under the Export Facilitation Scheme (EFS). Due to the policy of the manufacturers, Pakistan has moved from fourth to eighth place in the list of cotton producing countries. Due to the very high production cost compared to the US, China, Bangladesh and India, Pakistan has been left out of the race for competition and competitiveness. More than 70 percent of the country's agricultural population is employed in agriculture. The country depends on the only cash crop like cotton. Due to the lack of government patronage and guidelines, the production of cotton has fallen to the lowest level in the country's history at five million bales. All taxes imposed by the government are being transferred to the farmers, due to which the farmers have become victims of financial burden and resentment. The government should provide facilities to the domestic industry. We hope that the government should formulate a policy in the upcoming budget by taking all the stakeholders of cotton, farmers, ginners and textile mill owners into confidence. The rate of taxes and duties should be reduced, the price of electricity should be reduced, sales tax and duties should be imposed on imported cotton, cotton yarn and cloth. Steps should be taken on a war footing to protect Pakistan's agricultural economy and textile economy, and the provision of industrial employment should be ensured.