Pakistan’s cotton industry faces collapse amid rise in duty-free imports

Pakistan’s cotton sector is on the brink of economic collapse despite the start of the new ginning season in mid-May, industry experts warn. The crisis is due to the duty-free cotton and yarn imports, which are undermining local production and threatening to slash ginning and textile operations below 50 per cent capacity in the 2025-26 Cotton Year.

Sources say, only three ginning factories are currently operational in Khanewal and Burewala (Punjab), with one or two in Tando Adam (Sindh) expected to start by May 25. Initial cotton sales are being settled at Rs 17,000-17,500 per maund, while phuti is trading between Rs 8,300-8,500 per 40 kg. The government has recently permitted cotton seed imports after nearly five decades. However, earlier trial imports from China, Australia, the US, and Brazil failed due to the absence of crop zoning laws, which resulted in environmental damage and poor yields.

Despite one of the lowest harvests only 5.5 million bales in 2024-25 around 200,000-250,000 bales remain unsold. Ginners also report millions in unpaid credit from textile mills. Compounding the crisis are water shortages and rising temperatures affecting crop health. Experts urge abolishing the Export Facilitation Scheme on cotton imports in the upcoming budget to prevent further economic damage.