The Trading Corporation of Pakistan (TCP) has proposed the retail sale of cotton on a daily basis at Karachi Cotton Association rates to immediately offload the procured stocks. Sources told Business Recorder Tuesday that this proposal has been submitted by the state run grain trader to the Ministry of Commerce for presentation in the ECC meeting for appropriate approval. As per previous ECC decision, TCP was asked to sell cotton stocks through tenders at reserve price.
However, the TCP received a poor response from traders and millers mainly due to imposition of 10 percent advances tax on cotton sale through auction. So far, the TCP has conducted seven tenders for sale of 95,400 cotton bales and could hardly sell 10,800 cotton bales in two tenders, while the remaining five were scrapped on technical grounds.
As the several departments are involved in the cotton procurement, Ministry of Commerce has shared the side scheme with Ministry of Finance, Ministry of Textile and Ministry of Food Security for their comments on the proposal. After receiving comments from these departments, ministry of commerce will present the proposal in the ECC meeting for a final approval, sources said.
As per the proposal designed by the TCP, cotton will be sold on retail basis at Karachi Cotton Association (KCA) rates, opened daily, as there is no advance tax on retail cotton sale. Under the proposal, the TCP will appoint commission agents, which will market the procured cotton and make efforts for the sale of the commodity. A TCP high official confirmed that a proposal for sale of cotton on retail basis has already been sent to the Ministry of Commerce in the first week of this month and is still in process. "We believe that this will be a easy way to offloaded cotton stocks as millers and traders will not be required to pay 10 percent advance tax on retail sale of cotton," he added.
He said the TCP opened last or seventh cotton tender during last week, however it was scrapped as the offers were less than reserve price announced by the Corporation. The TCP received two bids of 22,000 cotton bales in the seventh cotton tender. A bid was for procurement of 6,000 bales (long staple) at a price of Rs 5,300 per maund against the reserve price of Rs 5,398 per maund. While another bid was for 16,000 bales, however the second bid price was also some Rs 75 less than the reserve price. Sources said out of seven tenders conducted by the TCP, so far some 6,800 cotton bales have been sold through first cotton tender and some 4,000 cotton bales in the fourth cotton tender. The remaining five tenders were scrapped on technical grounds as there was nil participation in two tenders while three fetched less than the reserve price bids.
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