Industry Awaits Notification on 18% Tax Imposed on Cotton Imports

The Pakistan Business Forum (PBF) has urged the Federal Board of Revenue (FBR) to promptly issue a Statutory Regulatory Order (SRO) to enforce the 18% general sales tax (GST) on imported cotton, as announced in the Finance Bill 2025.

In an official statement, the PBF noted that although the federal budget explicitly called for GST on cotton imports, the implementation has yet to begin due to the absence of the necessary SRO. “It has been more than three weeks since the budget’s approval, but the delay continues without justification,” the forum stated.

PBF Chief Organiser Ahmad Jawad alleged that powerful interest groups are influencing the delay, obstructing efforts to support domestic cotton growers. “The government must ensure transparency and move swiftly to implement this tax in the larger interest of the economy and the farming community,” he said.

The forum highlighted a critical shift in Pakistan’s cotton trade dynamics, warning that imports have now surpassed domestic production for the first time in the country’s history—a development that threatens the sustainability of both the textile and agriculture sectors.

“The FBR must act with urgency and issue the SRO without any further delay,” the PBF asserted.

According to the forum, Pakistani importers have already finalized contracts to bring in 7.5 million bales of cotton from international sources. “After years of struggle, our farmers were finally given a level playing field through budgetary measures. It is now time to implement those measures effectively,” said Jawad.

To restore Pakistan’s standing as a global cotton leader, he urged both federal and provincial governments to roll out a comprehensive cotton revival programme. He also recommended that imports of raw materials affecting local industries, such as cotton, should be excluded from the Export Facilitation Scheme.

The PBF also voiced concern over the current cotton crop performance, particularly in Sindh. Latest figures show Sindh’s cotton supply at just 152,650 bales so far this year, a steep 53% drop from 327,666 bales during the same period last year.

Punjab, on the other hand, has shown improvement, recording a 27% increase with 145,101 bales delivered. Districts such as Khanewal (28,825 bales), Vehari (33,950 bales), Dera Ghazi Khan (19,397 bales), and Rajanpur (9,200 bales) have reported notable yield improvements.