Lahore: Pakistan’s cotton industry is facing a severe operational breakdown after several cotton ginning factories in Sindh suspended operations barely a month after reopening for the season. Industry representatives have pointed directly to the federal government’s fiscal policies, specifically the retention of a heavy 18 per cent sales tax on the cotton ginning sector in the latest federal budget, as the primary trigger for the widespread financial distress. The sudden closures have accelerated a historic collapse in domestic cotton prices, creating immense financial strain for local farmers, ginners, and the broader textile supply chain.
Prior to the budget announcement, delegations from the All Pakistan Textile Mills Association and regional cotton ginners had engaged with high-ranking federal officials to secure relief from the compounding tax burden. Industry leaders note that authorities had explicitly assured them that the sales tax on cottonseed and oil cake would be abolished, alongside a significant reduction in levies on raw cotton. However, despite the incorporation of multiple last-minute amendments to the Finance Bill, the promised tax concessions were entirely omitted. The lack of fiscal relief immediately destabilised the market, causing the Karachi Cotton Association’s benchmark spot rate to plummet by 4,000 Pakistani Rupees per maund to land at 17,500 rupees, with corresponding price crashes reported across agricultural hubs in Punjab and Sindh.
The economic devastation has been further intensified by severe weather conditions across major agricultural belts. Tando Adam Cotton Ginners Association President Hareesh Kumar stated that prolonged, intense heatwaves have severely compromised the quality of harvested cotton and drastically reduced lint recovery rates, multiplying the operational losses for processing plants. Kumar warned that if immediate corrective policy changes are not implemented, a wider wave of factory shutdowns will inevitably hit major cotton-producing districts like Sanghar, leaving growers with virtually no registered buyers and inadvertently driving the agricultural trade into unmonitored, undocumented channels. Concurrently, the Pakistan Cotton Ginners Association has cautioned digital market information providers against disseminating unverified and misleading pricing data, alleging that inaccurate online reporting is artificially distorting market sentiment to benefit speculative traders.
