KARACHI: The local market remained stable on Tuesday. Market Sources told that trading volume remained thin. Market Sources told that the rate of cotton is in between Rs 13000 to Rs 13300 per maund.
The rate of new crop of Phutti in Sindh was in between Rs 5700 to Rs 6000 per 40 kg. The rate of Phutti in Punjab is in between Rs 6200 to Rs 6400 per 40 Kg. The rate of Banola is in between Rs 1800 to Rs 2000 per maund.
Cotton Analyst Naseem Usman told Business Recorder that government has increased GST on raw cotton and ginned cotton from 10 percent to 17 percent. Ginners are protesting against increase in the rate of GST. Ginners will go on strike if the decision is not withdrawn by the government. It is useless to announce the support price of cotton after the sowing.
The Pakistan Cotton Ginners Association (PCGA) rejected a tax on cotton seed oil and increase in tax on cotton lint in the budget, calling it against the vision of Prime Minister Imran Khan.
They announced closing down ginning factories across the country if the decision to increase the sales tax and impose new taxes were not withdrawn.
Talking to the media along with the other office bearers of the association, PCGA Chairman Dr Jassu Mal said because of the imposition of new tax and increasing the already ones, the cotton growth in the country has lowered down to negative.
He said that it seemed that the budget was based on cotton animosity as increasing the sales tax rate from 10 per cent to 17 per cent on cotton lint and imposing a new sales tax of 17 per cent on cottonseed oil will prove disastrous for the cotton industry.
“Already the cotton production has fallen from 15 million bales to a low of 5.5 million bales due to the lack of effective policies while only 450 ginning factories, out of 1,200, in the country are operational. The fresh taxes on both commodities will cut the cotton production,” he said.
He said the prices of ghee and cooking oil would increase rapidly because of this only decision of the government which would also be resulted in an increase in inflation.
He said if the government was not going to end these taxes, the ginners would have no other option but only to protest by closing their factories.
“Ministers and parliamentarians should come forward and play their role to end these taxes. The policy of ‘grow cotton and save the economy’ is the only policy which could ensure the prosperity of the farmers, end the unemployment and strengthen the economy,” he said.
As against the government claim to facilitate exporters to boost country’s exports, some 2,102 small and medium exporters have reportedly closed down their businesses in the last two years, following severe liquidity crunch, primarily due to pending tax refunds for years.
A total 6,817 textile exporters were registered in Fiscal year 2017-18, which has come down to 4,715 in FY2020-21, depicting a sharp reduction of 2,102 exporters, Jawed Bilwani, Chairman, Pakistan Apparel Forum told Business Recorder on the sidelines of post budget 2021-22 joint press conference of the value added textile exporters at PHMA House on Monday.
He said that with the continuation 17 percent GST in 2021-22, many more Small and medium textile exporters who managed to survive last year, are now feared to close their businesses in the wake of liquidity pressure. 17 percent GST on exports and refund after months is the key hurdle in the boost in exports, he said.
He said the Government export friendly policy and announcement in the Federal Budget to continue the support to the export sector shall remain meaningless and fruitless unless the major demands of value added textile exporters regarding taxation matters are not provided.
While addressing the press conference the value-added textile associations representatives urged the Government to restore the zero rating of GST - No Payment No Refund Regime if not possible to reduce GST rate from 17 percent to 5 percent at least, reduce WHT from 1 percent to 0.5 percent, suspend collection of EDF surcharge, allow import of plant & machinery at zero percent for manufacturer and withdraw section 203(A) Power to arrest and prosecute and request the Finance Minister for immediate meeting.
Tariq Munir, Chairman (SZ) and Faisal Mehboob Sheikh, Chairman (NZ), Pakistan Hosiery Manufacturers & Exporters Association, Rafiq Godil, Chairman, Pakistan Knitwear and Sweater Exporters Association Abdus Samad, Chairman, Pakistan Cloth Merchants Association, Muhammad Naqi Bari, Chairman Pakistan Readymade Garments Manufacturer and Exporters Association, Zulfiqar Ch, Chairman, All Pakistan Textile Processing Mills Association, Engr Bilal, Vice-Chairman, All Pakistan Bedsheets & Upholstery Manufacturers Association, Farrukh Iqbal, Vice-Chairman PHMA, Dr Khurram Tariq, Amjad Khawaja, and Syed Zia Alamdar, Former President FCCI participated in the Joint Press Conference.
They requested the Finance Minister for immediate meeting to brief the consequences due to non-consideration of their genuine and pragmatic demands to maintain the pace of export growth.
They were of the view that the Federal Budget 2021-22 in general perspective, is better as compared to previous budgets, however, the textile exporters’ most anticipated demands for restoration of Zero Rating of GST - No Payment No Refund System, reduce WHT rate to 0.5percent and suspension of EDF surcharge in Budget 2021-22 was not given deserving consideration which has spread dissatisfaction and annoyance.
Moreover, ICE cotton futures tumbled as much as 4.6percent to trade limit down on Monday, pressured by a drop in grains market after weather in the US Midwest region turned favourable.
Cotton contracts for December were down 1.79 cent, or 2percent, at 86.13 cents per lb, by 12:00 p.m. EDT (1600 GMT), after dropping as much as 4 cents to its lowest since June 1 at 83.92 cents.
Intercontinental Exchange Inc has set the daily price limit for all Cotton No. 2 futures delivery months trading upwards of 80.01 to 110.00 cents per pound at 4 cents above and below the prior day settlement price.
“It’s mainly a influence from the grains, the weather forecast has somewhat shifted in the Midwest, so corn and beans and wheat were all decisively lower, which influenced cotton to trade down,” said Keith Brown, principal at cotton brokers Keith Brown in Georgia.
“After experiencing those good US Department of Agriculture (USDA) numbers last week and sharply rallying, people got spooked, scared and just sold out,” Brown said, adding “the market will recover, but then it’ll go sideways for a while until the acreage numbers come out.”
The Spot Rate remained unchanged at Rs 12300 per maund. The rate of Polyester Fiber was increased by Rs 3 per Kg and was available at Rs 205 per kg.
Copyright Business Recorder, 2021