Press Release

Sheikh Khalid Tawab urges to abolish duty on cotton import.

(Karachi P.R. 1st July, 2016) Acting President of Federation of Pakistan Chambers of Commerce & Industry (FPCCI) Sheikh Khalid Tawab has urged Federal Finance Minister Senator Muhammad Ishaq Dar and Nisar Muhammad Khan, Chairman Federal Board of Revenue (FBR) to immediately abolish the duty on import of raw cotton which had been increased to 3% from 2% vide Finance Act, 2016 as well as additional duty levied @ 1% vide SRO 1178(I)/2015 dated November 30, 2015, thus increasing the total incidence of duties to 4%.

Khalid Tawab argued that the raw cotton is a basic raw material of cotton spinning industry and constitutes about 70% of the total cost of production. He recalled that Pakistan is one of the largest cotton producer countries in the world and cotton textile industry contributes a lion share in the total export to the tune of about 60% to 65%; provides employment opportunities to about 40% of the industrial labor force and its share in GDP was 8%. However, due to indigenous cotton crop failure in 2014-15 its production was declined by almost 35% thus slashing the growth rate by about 0.5%. Moreover, he said that cultivation of cotton in 2016-17 is also expected to decline by about 25% which will ultimately decline the availability of cotton to the spinning industry compelling it to import the shortfall of over 3 million bales @ 4% duties to keep the production wheel moving and to meet export orders well in time and avoid default from meeting orders.

Sheikh Khalid Tawab lamented in this scenario, instead of providing relief to the cotton textile industry, the government has increased the duty, thus eroding the competitive edge of our textile products in the global market. In addition to it the Acting President of FPCCI said that the industry is also already suffering from the high cost of doing business and acute shortage of energy in the country and now even has to compete with a surge in cost of cotton yarn imports, from its regional competitors, besides meeting the adverse effect of UK exit from EU in the wake of GSP Plus status granted to Pakistan.