Farmers are asking to end at GST in local cotton

Lahore:

Following the government’s decision to impose 18% of the general sales tax (GST) on imported cotton and threads on the amended Funding Bill 2025, farmers and industrial groups are now urging the authorities to abolish GST for local cotton and by -products.

Pakistan Kissan Ittihad (PKI) President Khalid Mahmood Khokhar strongly opposed the ongoing taxation of domestic cotton, saying it is unjustly addressed to local growers and further erodes minutes of profit.

While Pakistan Business Forum (PBF) welcomed the imported cotton tax to help restore balance in the value of textile products, he warned that domestic producers were still burdening the weight. “Local spinners are still subject to GST, which recover from farmers, treat them as withholding agents. This is unfair and must be corrected,” said PBF president South Punjab Malik Talat Suhail.

Cotton farmers, who have already been burdened with increasing production costs, find it difficult to continue cultivating. According to PKI, cotton production was reduced by 14.8 million balls in 2011-12 to below 7.5 million balls in 2024-25-reduced almost 50%. Meanwhile, imports are now exceeding 5 million balls and exports have almost disappeared. An important issue is the gap between the enlargement between the cost of input and the production prices. In 2010- now, in 2024-25, the price is approximately RS7,600 per maund, just as $ 27 due to currency damping. This marks a 250% decline in dollar terms, while the cost of input has been raised.

Fertilizers have tripled in a decade. A DAP 50kg bag (Diammonium phosphate), once priced in RS3,236, now costs RS12,900 (298%rise). NP (Sarsabz Nitrophos) has jumped from RS2,108 to RS8,100 (284%), Urea from RS1,035 to RS4,230 (309%) and SOP (Sulfal) from RS2,807 to RS10,000 (256%). These hikes have put over 90% of small and medium -sized farmers under serious financial pressure.

Energy prices have also increased. Diesel has risen from RS85 per liter in 2012 to RS264 in 2025. Electricity for irrigation has increased from RS4 per unit to RS42 – 950%increase. Work costs are also increasing, with cotton fees rising from RS100 per Maund in 2010-11 to RS1,000 per Maund today.

In response, PKI has described urgent reforms. These include removing 14% GST in tractors to support mechanization and removing 18% GST in local constructed tools mounted on tractors. They also call for the removal of GST to “Khal Banaula”, a basic cotton by -product used in animal feed.

PKI has requested the creation of a basic product price committee to ensure fair pricing and a 25% guaranteed return on farmers’ investment. They further propose a level of electricity RS10 per unit for irrigation pipe wells and the timely export of surplus products to stabilize prices and reduce losses.

The PBF reiterated these concerns, stressing that taxes on cotton and cotton-are redeemed by most cotton-producing countries-overwhelmed by farmers and shifting cultivation to water-causing crops, threatening both agriculture and water safety.

Both organizations warn that without bold reforms, Pakistan is in danger of becoming a clean importer of cotton.