During its recent visit to the headquarters of All Pakistan Textile Mills Association (APTMA), A high-level delegation from the International Cotton Advisory Committee (ICAC), led by Eric Trachtenberg, Executive Director discussed the state of Pakistan's cotton and textile value chain.
The delegation met with APTMA leaders and representatives from the Pakistan Central Cotton Committee (PCCC), including Shahid Sattar, Secretary General, APTMA; Kanwar Usman, Head-Textiles,ICAC; Dr Yousaf Zafar, Vice President, PCCC and Dr. Ahmad Waqas. PCCC). Their discussions focused on the challenges and opportunities facing Pakistan's cotton and textile sectors.
Sattar highlighted critical issues plaguing the cotton value chain, particularly the detrimental impact of the 18 per cent General Sales Tax (GST) on domestic cotton supply. He argued, GST has led to significant decline in Pakistan’s cotton production, undermining the competitiveness of local spinning and weaving industries. A great disparity exists between domestic inputs which are subject to 18 per cent sales tax and imports under the Export Facilitation Scheme (EFS) which are available duty-free and sales tax-free, he argued.
Exporters using local inputs face sales tax refund delays exceeding six months and receive only 70 per cent refunds, resulting in significant financial losses, job losses, and depletion of foreign exchange reserves, stated Sattar. EFS imports of cotton, yarn, and other intermediate inputs should be subject to the same sales tax regime as local products, he urged. He also recommended restoring the EFS to its June 2024 structure and adopting India's model of graduated sales tax rates.
Trachtenberg reiterated ICAC's commitment to supporting Pakistan's textile industry through informed policymaking. He announced ICAC's plan to publish a policy paper addressing these challenges and offering strategic recommendations.
Usman emphasized on the role of the Ministry of Commerce in resolving these issues to boost textile exports and support Pakistani cotton farmers. Comparing these with Bangladesh, he noted similar challenges and ICAC's active support for member countries, including Pakistan, in navigating these difficulties.
Praising APTMA's role in promoting textile exports, the delegation expressed an interest in publishing a report on Pakistan's cotton supply chain. Both organizations agreed, reviving the cotton crop is crucial for Pakistan's sustainable economic growth. The meeting concluded with a shared commitment to safeguarding the livelihoods of millions connected to Pakistan's cotton value chain and textile industry.
