TAHIR AMIN

ISLAMABAD: Customs duty, additional custom duty and sales tax has been re-imposed @ 3%, 1% and 5% on the import of cotton with effect from July 15, 2018 to maintain stability in cotton prices in the country, sources revealed to Business Recorder.

In the last meeting of the PML-N Cabinet held on May 31, 2018, the Ministry of National Food Security and Research moved a summary, seeking re-imposition of customs duty, additional custom duty and sales tax on import of cotton.

The summary maintained that area under cotton in Pakistan has witnessed a decline over the last few years. Price advantage and support price of other commodities are amongst the main reasons for this decline. Pakistan produces around 13 million bales of cotton while it imports about one million bales to meet the gap between consumption and production. Additionally, 1 to 1.5 million bales Extra Long Staple (ELS) cotton per annum is also imported, as this quality is not produced in the country.

It further maintained that the government withdrew customs duty, additional customs duty and sales tax on the import of cotton on January 23, 2018. Resultantly, 2,130,958 bales were imported during Jan-April 2018, which is 10.41% more than the 1,930,035 bales during the same period last year.

Cotton production in 2017-18 (11.98 million bales) witnessed a 12% increase over the past year (10.68 million bales in 2016-17) but it is apprehended that if import of cotton is continued to be facilitated, it might create an imbalance in cotton stocks in the country.

This, in turn, is anticipated to exert a downward pressure on cotton prices in the beginning of the current season, thus jeopardizing the interest of farmers. The new crop would start arriving in second/third week of June, in Sindh. The Pakistan Central Cotton Committee (PCCC) meeting held on May 23, 2018, under the chairmanship of Federal Minister for NFS&R, recommended the re-imposition of customs duties and sales tax on the import of cotton prior to arrival of cotton in the market.

The summary maintained that “in view of the foregoing, it would be appropriate that customs duties and sales tax may be re-imposed before the cotton starts arriving in ginning factories, as done during the previous cotton season, while giving cover to the cotton imports that are in the pipeline. This would help to maintain stability in cotton prices in the country, give farmers a confidence for better management and investment in the existing crop, thus helping in improving yields.

“It is therefore proposed that customs duty, additional custom duty and sales tax withdrawn on January 8, 2018 @ 3%, 1% and 5%, respectively, may be re-imposed on the import of cotton, with effect from July 15, 2018”.

Cotton Commissioner Dr Khalid Abdullah told Business Recorder that the cabinet has granted approval to the summary and customs duty, additional custom duty and sales tax withdrawn on January 8, 2018 @ 3%, 1% and 5%, respectively, re-imposed on the import of cotton, with effect from July 15, 2018.