Cotton cess hike stalled for 14 years, cotton sector revival at risk

Pakistan’s cotton sector faces mounting uncertainty as the long-awaited increase in cotton cess rates remains unimplemented more than 14 years after initial approval, raising concerns about the financial stability of the Pakistan Central Cotton Committee (PCCC) and the sector’s revival prospects.

The Economic Coordination Committee (ECC) first approved a cess hike in 2011, establishing a committee to assess research requirements. The panel recommended raising the rate from Rs20 to Rs50 per 170-kg bale, with a 30 percent increase every three years to cover rising R&D costs. The Federal Cabinet enacted the decision under the Cotton Cess Act 1923 in July 2012, with scheduled increases in 2015, 2018, 2021, and 2024. According to the ECC formula, the current legal rate in 2025 should stand at Rs142.80 per bale.

High-level efforts to implement the increase have repeatedly stalled. During the sixth meeting of the Cabinet Committee on Essential (Cash Crop) Commodities on Oct 22, 2025, chaired by Deputy Prime Minister Muhammad Ishaq Dar, the committee endorsed collection via the Federal Board of Revenue (FBR), majority cotton industry representation in the Pakistan Cotton Advisory Council (PCAC), and allocation of most cess proceeds to R&D. Yet the Ministry of National Food Security & Research (MNFS&R) has failed to act on repeated reminders.

An inter-ministerial meeting on Dec 5, 2025, approved a Cotton Revival Plan. However, the All Pakistan Textile Mills Association (Aptma) later proposed capping the cess at Rs100 per bale, while committee members insisted the rate follow the legal formula. Analysts warn that continued delays threaten research funding, industrial growth, and the broader cotton economy.