LAHORE: For the first time in history, Pakistan has emerged as the largest importer of American cotton, driven by a combination of tax-free imports, sales incentives, and lower-than-expected local production, which has also been impacted by poor weather conditions.
According to a report from the US Department of Agriculture, Pakistan has imported a total of 1.192 million bales (160 kg each) of US cotton, surpassing other countries. Vietnam ranks second, followed by Turkey, Switzerland, Mexico, China, and India, which is now the seventh-largest buyer of US cotton.
In total, Pakistan has reportedly signed contracts for 3.0 to 3.5 million bales of cotton from the United States, Brazil, and other nations, with more deals in the pipeline. Pakistani textile mills are expected to import as many as 5.5 million bales this year to meet their needs.
Ihsanul Haq, Chairman of the Cotton Ginners Forum, attributes this surge in imports to an 18% sales tax on locally produced white lint, which has incentivized mills to purchase tax-free imports. Haq also expressed concerns about the sales tax exemption on yarn imports, noting that it has kept local cotton prices low, hurting domestic growers.
Additionally, he raised alarms about the influx of Indian yarn into Pakistan through Dubai, further complicating the market for local cotton producers.
In comparison to Pakistan’s import of over 1.19 million bales, other major buyers include Vietnam (0.96 million bales), Turkey (0.67 million bales), Switzerland (0.65 million bales), Mexico (0.59 million bales), China (0.52 million bales), and India, which has purchased only 0.258 million bales of US cotton.
