Cotton imports into the nation totaled $2.3 billion (a 44 percent increase) from July 2020 to May 2021 (11MFY21) compared to the same time the previous fiscal year.
Despite increasing orders and incentives to promote exports, Pakistan produced just 5.6 million bales in FY21. Cotton sales tax has been raised to 17% from 10%, according to Finance Minister Shaukat Tarin. Cotton seed oil, or banola, which previously had no tax, now has a 17 percent charge. Farmers and ginners intend to strike if the government does not agree to their demand for tax elimination.
On Sunday, the Pakistan Cotton Ginners Association will decide whether to go on a strike. They are criticising the government’s decision to raise taxes as well as the low cotton yield. Cotton has a significant economic effect since it generates lint for textiles as well as byproducts such as cotton seed oil and cotton cakes.
When June numbers are included in, Pakistan’s cotton import bill would rise to $3 billion. Cotton prices in the domestic market are now higher than in the US, indicating increased demand and less supply. 850 ginning facilities were closed due to low cotton output the previous season. Despite poor cotton output, exports increased 18.2 percent to $25.294 billion in FY21, up from $21.394 billion in FY20.
The Federation of Chambers of Commerce and Industry Pakistan (FPCCI) recently met with the Monsanto and Bayer Crop Science Regulatory Teams to get technology that increased Indian cotton output from 10 million bales to 40 million bales. Despite the Covid-19 epidemic, cotton output in India this year is expected to be about 36 million bales.