Pakistan recently waived all duties and taxes on import of cotton and allowed its import via the Torkham land border from Afghanistan and Central Asia to meet the demand of the value-added textile sector. The decision will be effective from January 15. The government had in 2014-15 imposed one per cent customs duty and 5 per cent sales tax on cotton import.
Over the next few years, its import was subject to 3 per cent regulatory duty, 2 per cent additional customs duty and 5 per cent sales tax. The duties were withdrawn in January-February 2017 and re-imposed in July-August.
The cabinet’s Economic Coordination Committee (ECC) took the decision.
On October 4 last year, the Cotton Crop Assessment Committee projected that cotton production at the end of the year would be 10.20 million bales as against the target of 15 million bales for the fiscal 2019-20.
To fill the gap, the commerce division has proposed duty-free import of cotton. But the ECC was informed that bulk of cotton would be lifted from local farmers by January 1 next year and the proposed exemption would not adversely affect the interests of local farmers. Both the commerce and national food divisions gave assurance that imported cotton would facilitate textile exports which are showing an upward trend, , according to Pakistani media reports.
The commerce and food security divisions were directed to engage with the cotton importers for establishment of facilities at Torkham. Necessary changes will be made in plant quarantine regulations for providing facility of meeting sanitary and phytosanitary requirements for cotton import through land routes.
As trade with India was recently suspended by Pakistan, Afghanistan and Central Asian States have become more viable economic sources for cotton import.