Islamabad: The cotton ginning industry across Pakistan has initiated an indefinite strike to protest against the imposition of new taxes and a significant increase in power tariffs for ginning units. This decision was reached during a general body meeting of the Pakistan Cotton Ginners Association (PCGA) held in Sukkur on Sunday.
PCGA chairman Chaudhry Waheed Arshad announced the immediate suspension of raw cotton procurement and the delivery of ginned lint to spinning units nationwide. Addressing hundreds of ginners gathered from various parts of the country, Mr. Arshad emphasized the severe financial difficulties faced by ginners, who already pay 11 different types of taxes. He stated that continuing the ginning business under such conditions was no longer feasible.
Mr. Arshad made it clear that no new cotton sale agreements would be signed, and deliveries of white lint to textile mills would cease until the PCGA's demands were met. He warned that the government would bear responsibility for any negative impact on cotton growers, the ginning and textile sectors, and cotton exports due to the strike.
Cotton Ginners Forum chairman Ihsanul Haq highlighted the existing 72% general sales tax (GST) on the ginning sector, which has prompted repeated appeals to the government for reduction. The recent budget proposal to impose an additional 10% GST on the sale of oil cake has exacerbated the situation, leading to further financial strain on the ginning industry.
Mr. Haq expressed concern over the rising undocumented business caused by excessive taxation and reiterated the urgent need for tax relief. He also pointed out the fixed electricity charges for ginning factories, set at Rs2,000 per kilowatt hour, which result in a minimum monthly payment of Rs600,000 even if a factory remains closed.
The strike poses a serious threat to cotton growers, who are already shifting to alternative crops due to high production costs, poor yields, and low market rates. The halt in raw cotton purchases will likely disrupt the market, delay payments to farmers, and adversely affect their ability to settle debts and invest in future crops.
Market observers predict that a 15-day strike could lead to a significant drop in raw cotton prices, potentially lowering the rate by at least Rs1,000 per 40kg from the current rate of around Rs9,500 per 40kg. Additionally, the delay in raw cotton procurement could damage the crop due to improper storage, affecting the quality of the lint whether stored indoors or outdoors.
The PCGA's strike is a call to action for the government to address the ginners' concerns and provide much-needed financial relief to ensure the sustainability of Pakistan's cotton industry.
