Pakistan Faces $2 Billion Cotton Shortage

Pakistan is facing a significant cotton shortage, with an import bill of approximately $2 billion for the 2026-27 financial year. Domestic production is expected to drop to just 4.9 million bales, falling short of the government's target of 9.6 million bales. The local spinning industry requires around 10 million bales annually, meaning Pakistan may need to import over 5 million cotton bales to meet industrial demand, costing an estimated $2 billion or Rs. 600 billion.

FPCCI Policy Advisory Board Chairman Mian Zahid Hussain highlighted that the decline in cotton production would put additional strain on Pakistan's foreign exchange reserves. He emphasized the need for the government to take urgent action to revive cotton production and support cotton ginners, farmers, and the textile industry. Pakistan's cotton production has consistently fallen below earlier levels, standing at around 7 million bales in FY2023-24, 5 million bales in FY2024-25, and 5.6 million bales in FY2025-26.

The shortage is largely attributed to a 33% reduction in the area under cotton cultivation over the past decade. High industrial energy costs, with neighboring countries receiving electricity at around 8 cents per unit compared to 14 cents per unit in Pakistan, also pose a significant challenge to the sector.

Mian Zahid urged the government to address the issue by shifting sugar mills out of cotton-growing zones, removing sales tax on cotton and related by-products, eliminating fixed taxes in electricity bills, and ensuring the full implementation of the Cotton Control Act. He advocated for the launch of the "Grow Cotton, Save Economy" campaign on an emergency basis and provided the ginning sector with industrial status to access electricity and gas at competitive industrial rates.