The International Cotton Association (ICA) has labeled 84 textile mills in Pakistan as defaulters for failing to honor their cotton procurement agreements. As a result, these mills are no longer allowed to import cotton from any global market.
According to the Pakistan Cotton Ginners Association, by the end of November 2024, Pakistan produced 5.2 million cotton bales. This is a 33% decrease compared to the previous year, showing a significant decline in domestic cotton production.
Despite the lower production, both cotton and bale prices have fallen. This is because mills have started importing cotton and thread from international markets after an 18% sales tax was imposed on textile mills. The drop in prices has raised concerns among cotton ginners and farmers. They fear that these price reductions could further harm domestic cotton production, as it may discourage local growers from continuing to cultivate cotton.
The situation is creating challenges for the local textile industry, with rising uncertainty over the future of cotton production and the financial stability of mills and growers. The government and relevant authorities may need to address these issues to support the industry and prevent further damage to the cotton sector.
