KARACHI: The Spot Rate Committee of Karachi Cotton Association has decreased the spot rate by Rs100 per maund on Tuesday and closed it at Rs8100 per maund.
Market sources told that Karachi Cotton Association has decreased the spot rate consecutively for the last two days. No significant trading activity was observed in the market however, 3900 bales of old cotton crop from Rohri was sold at Rs7200 per maund, 600 bales from Ghotki were sold at Rs7900 per maund, 400 bales from Taunsa Sharif were sold at Rs7800 per maund and 200 bales from Burewala were sold at Rs8000 per maund. The cotton of new season 2020-21 were sold between Rs7900 to Rs8000 per maund.
Cotton Analyst Naseem Usman told that the future of the cotton and ginning industry is at stake as government had not accepted the demands of the ginning industry. He also said that it is expected that FBR is going to serve notices to the ginners to pay billions as sales tax. He said that meeting of ginners is going to held in Multan in which if they decided to close the factories it will be a big loss for the economy of the country.
The business community is not happy with the federal budget as government had not announced any incentives for the textile and export oriented sector. The government had assured the textile sector that sales tax will be abolished but no such announcement was come from the government
The All Pakistan Textile Mills Association (APTMA) in its statement said that the proposed budget for FY2020-21 has completely failed in addressing serious industry issues in the light of the worldwide crisis created by Covid-19. This is likely to lead to large-scale unemployment and closures as the market dynamics have changed significantly in the midst of the Covid-19 crisis.
"Bold and direct steps were required to retain our export earnings and maintain employment in a shrinking world market due to lack of demand, especially for textiles which constitute 60 percent of export earnings," the APTMA said.
"Our balance of payments position is likely to worsen as a result of the lack of appreciation of the issues facing exports and the expected 20 percent drop in remittances (World Bank estimate) due to large-scale layoffs in the Gulf countries and Saudi Arabia," it added.
APTMA urged the government to resolve the following issues at the earliest. Provision of regionally competitive energy prices: Continuation of regionally competitive fixed electricity tariff at 7.5 cents/KWh and $6.5 per MMBTU for RLNG/gas across the value chain to ensure competitive export pricing.
Sales tax exemption on imports through bond, EOU and DTRE would be withdrawn immediately.
17 percent is a very high level incentive to cheat. A lower rate would: a) allow proper documentation; b) increase FBR revenue through wider application and c) allow organized domestic retailers to compete in the 13-billion-dollar domestic textile market.