Pakistan has experienced a dramatic surge in the import of cotton and cotton yarn in fiscal year 2025, with imports exceeding the country’s total domestic production for the first time. This rise is attributed to policy distortions, adverse weather, and other factors, raising concerns among industry stakeholders.
While textile exports saw a modest increase of 7.22%, reaching $17.88 billion, imports of textile-related products surged by 61%, totaling $4.24 billion, according to the Pakistan Bureau of Statistics.
During FY25, textile mills imported approximately 4.5 million bales of cotton and yarn, equivalent to 1.5 million bales, while domestic production reached just 5.5 million bales, marking the second-lowest output in Pakistan’s history. The 18% sales tax on locally produced cotton has been identified as a major barrier to domestic purchasing, while over 100,000 bales of unsold cotton remain stockpiled at ginning factories.
The textile industry attributes this rise in imports to factors such as tax-free imports of cotton and yarn earlier allowed by the government, high taxes on the domestic ginning industry, and the impact of adverse weather conditions that led to a significant decline in local cotton production.
Although the government’s recent decision to withdraw sales tax exemptions on imported cotton and yarn may provide some relief to local industries, Haq emphasized the need for further action.
Industry leaders called for the elimination of the 86% sales tax on the ginning sector to help revive closed ginning factories and dormant oil mills, which would stimulate demand, stabilize cotton prices, and improve farmers’ income.
