LAHORE: Pakistan has become the largest buyer of American cotton for the first time in history because of sales tax-free imports and lower-than-expected production of the local crop, whose quality has also been affected by adverse weather conditions.

A report by the US Department of Agriculture suggests that a total of 1.192 million bales (160 kg each) have been shipped to Pakistan, the highest in the world. Vietnam is second, Turkiye third, Switzerland fourth, Mexico fifth, China sixth, and India is the seventh largest buyer of US cotton.

According to a cautious estimate, Pakistan has signed contracts for 3.0m to 3.5m bales of cotton from the United States, Brazil and other countries, while more contracts are in the pipeline.

Pakistani textile mills are expected to import up to 5.5m bales to meet their requirements this year. Cotton Ginners Forum chairman Ihsanul Haq believes that an 18 per cent sales tax on local white lint has encouraged millers to import tax-free lint to meet their requirements.

He says that besides cotton, yarn import has also been exempted from sales tax, causing a great concern among the domestic cotton sector because the measure is keeping the prices of the local crop depressed to the disadvantage of the cotton growers.

He claims that Indian yarn is also making its way into the local market through Dubai.

Against Pakistan’s import of over 1.19m bales, Vietnam has so far bought 0.96m bales, Turkiye 0.67m bales, Switzerland 0.65m bales, Mexico 0.59m bales, China 0.52m bales, and India only 0.258m bales from of US cotton.

Published in Dawn, November 16th, 2024