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Pakistan's FBR withdraws sales tax, duty on cotton imports
Jan '18
Pakistan’s Federal Board of Revenue (FBR) recently withdrew 5 per cent sales tax and 4 per cent customs duty on cotton imports following a government order. The country’s textile sector will avail the benefits on imports of raw and ginned cotton retrospectively from January 8, a FBR notification said. The move, however, was resented by cotton growers.

The notification was possibly delayed due to protests by farmers and ginners against the move, according to a Pakistani newspaper report, which said millers were planning to launch a protest campaign soon against the belated notification.

A delegation of Pakistan Cotton Ginners Association had met the prime minister a few days back to demand customs duty and sales tax on cotton import.

Pakistan has been importing long and extra-long staple cotton since 2001 as the country primarily produces short- to medium-staple length cotton.

Cotton production is expected to be around 11.1 million bales of 170kg each during the current crop year of 2017/18 against the revised production target of 12.6 million bales.

In January last year, government pulled out four percent customs duty and five percent sales tax on cotton import to promote value addition, but the levies were restored after six months on prospect of increase in cotton production.

Ginners and farmers oppose duty-free cotton import, saying that would result in reduced local market prices and hurt their interests. Trading in the cotton market came to a standstill starting January beginning because of a tug of war between textile bodies and ginners.

Textile mill owners were not willing to buy what they deem costly local cotton, while ginners did not want to sell commodity on low price. Ihsanul Haq, chairman of Pakistan Cotton Ginner Forum, said farmers might lose interest in cotton cultivation the next season. The Agri Forum Pakistan also criticised the government’s decision. (DS)

Fibre2Fashion News Desk – India

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