Ginners flags fabric import loopholes under EFS

July 27, 2026 (MLN): Pakistan's cotton industry is confronting a two-front crisis, with fresh allegations of under-invoiced Chinese fabric imports under the Export Facilitation Scheme (EFS) surfacing just as heavy rains and flood risks threaten the standing cotton crop.

Cotton Ginners Forum Chairman Ihsanul Haq said that unless loopholes in the EFS mechanism were plugged, an already struggling sector burdened by falling cotton output, high energy costs, heavy taxation and costly bank financing  could see conditions worsen further.

He said that after earlier concerns over mis-invoiced yarn imports from China entering the domestic market, similar red flags were now being raised over fabric imports routed through the same scheme, according to media reports.

Ihsanul Haq called on the federal government to order a comprehensive audit of all EFS-related imports to shield the local textile and cotton industries from further harm.

He noted that years of shrinking cotton production and deteriorating fibre quality, combined with steep taxes, record-high electricity and gas tariffs, and expensive credit, had pushed export-oriented mills to rely increasingly on imported cotton.

Furthermore, he pointed to the spread of sugarcane farming into traditional cotton belts as a factor behind changing environmental conditions that have hurt cotton quality. Citing these quality concerns, Ihsanul Haq said textile mills had lined up sizeable import deals for US and Brazilian cotton this season, with contracts for roughly 280,000 bales of American cotton finalized for May, while volumes expected from Brazil are projected to surpass that figure.

Separately, Ihsanul Haq warned that keeping sales tax elevated on the ginning industry risked pushing more trade into undocumented channels this season.

He cautioned that several hundred thousand bales could end up outside official records, understating national cotton production figures and eroding Pakistan's standing in international cotton markets.

He urged authorities to meaningfully cut the sales tax burden on ginners to discourage undocumented dealings and encourage formal trading.

On the market front, cotton trading stayed muted through the week as persistent rains disrupted activity in key growing regions.

Supply tightened further after some ginners who had earlier sold cotton at lower rates  shut down or scaled back operations to stall deliveries against those contracts, fueling panic buying and driving prices up.

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