LAHORE: For the first time in history, Pakistan has emerged as the largest importer of American cotton, driven by tax-free imports, sales strategies, and a lower-than-expected local cotton yield affected by unfavorable weather.
Pakistan has imported 1.192 million bales (each weighing 160 kg), superseding all other countries, according to a report by the US Department of Agriculture. Vietnam follows Pakistan in the purchase of US cotton, with Turkey in third place, Switzerland in fourth, Mexico in fifth, China in sixth, and India in seventh.
Pakistan has signed contracts for between 3.0 and 3.5 million bales from the United States, Brazil, and other countries, according to industry estimates, with additional agreements being anticipated. It is anticipated that Pakistani textile mills will import up to 5.5 million bales this year to meet their operational requirements.
Ehsanul Haq, Chairman of the Cotton Ginners Forum, observes that the 18 percent sales tax on local cotton has incentivized millers to select tax-free imported fiber.
Furthermore, any imported cotton yarn has also been exempted from sales tax, which has been problematic to the domestic cotton sector, making local prices lowly competitive and making growers disadvantaged.
Haq also highlights that Indian yarn is reportedly entering Pakistan’s market through Dubai, adding to the challenges faced by local producers.
Vietnam has imported 0.96 million bales of US cotton, Turkiye 0.67 million, Switzerland 0.65 million, Mexico 0.59 million, China 0.52 million, and India just 0.258 million bales, in contrast to Pakistan’s import figures.
