Pakistan has become the largest global buyer of American cotton for the first time. This shift is due to tax-free imports and a major shortfall in local cotton production caused by adverse weather.
A US Department of Agriculture report shows Pakistan imported 1.192 million bales (160 kg each) of US cotton, surpassing Vietnam, Turkiye, and China.
Contracts for an additional 3.0 to 3.5 million bales have been signed with the US, Brazil, and other countries. Total imports are expected to reach 5.5 million bales this year to fulfill local textile needs.
Ehsanul Haq, chairman of the Cotton Ginners Forum, said the 18% sales tax on domestic cotton pushed millers to opt for tax-exempt imported cotton.
Yarn imports are also tax-free, resulting in lower prices for local cotton and creating worries among local growers.
Haq pointed out that Indian yarn is entering the Pakistani market through Dubai, adding to the local cotton industry’s challenges.
This reliance on imports highlights the difficulties in Pakistan’s agricultural sector, struggling with lower yields and quality issues due to changing weather.
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