International Cotton Association declares 84 Pakistani textile mills as defaulters

The International Cotton Association (ICA) has declared 84 textile mills in Pakistan as defaulters for failing to honor cotton procurement agreements. This decision bars these mills from importing cotton globally, posing a significant challenge to the country’s textile sector.

As per Ahsanul Haq, Chairman of the Cotton Ginners Forum, the situation stems from low domestic cotton production and increased reliance on imports. Pakistan produced 5.2 million cotton bales by November 2024, marking a 33 per cent decline compared to the same period last year. Despite the reduced output, domestic cotton prices have dropped as mills turned to international markets following the imposition of an 18 per cent sales tax on cotton and thread purchases.

This decline in prices has alarmed ginners and growers, who fear further reductions in cotton cultivation. Ahsanul Haq urged the government to remove the sales tax to support the local cotton industry, stabilize prices, and curb the outflow of foreign exchange through imports.

The ICA’s decision adds another layer of uncertainty to Pakistan's struggling cotton sector, emphasizing the need for urgent policy interventions to revive domestic production and strengthen the industry’s global standing.