PCGA urges removal of tax on cottonseed, warns industry crisis

KARACHI: The Pakistan Cotton Ginners Association (PCGA) has called on the federal government to withdraw taxes imposed on cottonseed cake and cottonseed in the upcoming Federal Budget 2026–27, warning that continued taxation could deepen the crisis in the country’s ginning sector.

PCGA Chairman Sham Lal Manglani said the current tax regime is placing severe pressure on the ginning industry, livestock farmers, small growers, and the rural economy.

He cautioned that if the policy continues, hundreds of additional ginning factories may shut down, further reducing domestic cotton production and threatening the broader agricultural value chain.

Manglani stated that taxation on cottonseed-related products is pushing market activity towards the undocumented sector, as most rural buyers are non-filers. He argued that this shift would fail to generate meaningful revenue for the government while increasing economic inefficiencies.

He highlighted a sharp decline in cotton production, noting that output has fallen from around 15 million bales to 5.8 million bales annually. He warned that production could drop further below 3 million bales if current conditions persist.

According to him, the ginning industry is already under severe stress, and continued pressure could lead to widespread factory closures, job losses, and increased reliance on imported cotton.

The PCGA urged the government to abolish all taxes on cottonseed cake and cottonseed, calling for a “ginner-friendly” budget that supports domestic production, stabilizes supply chains, and protects rural livelihoods.

Manglani emphasized that the ginning sector is a key part of Pakistan’s cotton value chain and requires immediate policy support to prevent further economic decline.