ISLAMABAD – Pakistan’s cotton and yarn imports have soared to $4.24 billion in fiscal year 2025, crossing the country’s domestic production for the first time, according to official data. Industry experts have blamed tax policies and poor weather for this surge.
The Pakistan Bureau of Statistics reported a 61% increase in textile-related imports, while textile exports grew only by 7.22%, reaching $17.88 billion. Cotton and yarn imports equaled nearly six million bales, compared to just 5.5 million bales of local production—one of the lowest levels in national history.
Experts say high domestic taxes have discouraged local cotton use. The 18% sales tax on cotton produced within Pakistan has made it more expensive than imported cotton, which was tax-exempt until recently. Meanwhile, over 100,000 bales of unsold cotton remain at local ginning factories.
Moreover, bad weather conditions worsened the supply crisis. Heavy rainfall and poor crop planning further reduced yields, making mills turn to imports. Industry leaders also highlighted that high taxes on ginning and oil mills have forced many units to shut down.
Although the government has now ended tax exemptions on imported cotton and yarn, stakeholders argue more must be done. They urged the removal of the 86% tax on the ginning sector to boost local supply chains and revive idle mills.
This shift in policy, if implemented, could raise demand for local cotton, balance market prices, and eventually benefit farmers. However, experts warn that delays in reforms could continue to harm Pakistan’s cotton sector and rural economy.