Duty or ban urged on export of raw cotton

The government should impose a duty or ban on the export of raw cotton, as it was sorely needed by the value-added textile sector.

It is also imperative in view of the damage to around 10 percent cotton crop in recent flooding in Punjab and Sindh. The Value Added Textile Forum and exporters said exports of raw cotton increased by more than 67 percent while combed or carded shot up by 100 percent. Export of raw materials are discouraged and value addition is given all facilities and incentives in the world, but in Pakistan it seemed government is not interested and prefers export of the country’s most essential raw material by ignoring value-added textile sector.

Raw cotton export from the country during July 2015 witnessed an increase of more than 67 percent, about 4,000 metric tonnes, worth $5.605 million as compared to 658 metric tonnes, worth $0.330 million during the same period last year, said members of Forum and Pakistan Apparel Forum. Despite a dip in textile group exports in July 2015 that dropped by 11.75 percent from $1.162 billion in July 2014 to $1.025 billion in during July 2015 the government added fuel to the fire by increasing sales tax by 50 percent in budget 2015-16, they added.

The exporters were already facing liquidity and it is feared exports would be worst in the coming months 2015-16. Jawed Bilwani, chairman and chief coordinator of the Forum, said overall exports declined by 16.90 percent during July 2015 over June 2015. A large number of countries have devalued their currency against dollar and globally the race of devaluation has started. India devalued by 7.06 percent, China by 5.61 percent, Vietnam by 6.44 percent, Sri Lanka by 2.62 percent, Turkey by 35.81 percent and Bangladesh by 0.15 while Pakistan appreciated its by 3.18 percent.

The sector was burdened with multiple taxes and high cost of inputs further burden would hurt the potential of export. He appealed to the government to make a policy for reduction in all cost of inputs. On other hand Karachi Cotton Association has opposed imposition of sales tax on raw cotton, as it would discourage production and smooth flow of exports. Nowhere in the world sales sax is imposed on raw cotton and any bottleneck in the smooth exports of cotton would prevent the growers from getting a fair price for their produce.

Nearly 80 percent to 85 percent of cotton crop is exported in the form of raw shape-cotton yarn. Exporters of raw cotton are operating on narrow margins, therefore they could not bear to keep substantial borrowed amounts stuck-up by way of payment and refund of sales tax for a more than eight months or even longer.

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