Lahore [Pakistan], December 7 (ANI): Pakistan's spinning and cotton textile sector is on the brink of collapse, with industry leaders warning that the country is facing its gravest industrial crisis to date.

The crisis has been driven by an unprecedented combination of excessive taxation, soaring electricity tariffs, and a flood of under-invoiced yarn and fabric imports, particularly from China and other regional markets, as reported by Dawn.

According to Dawn, Cotton Ginners Forum Chairman Ihsanul Haq stated that over 100 spinning mills and 400 ginning factories have already ceased operations, resulting in a severe reduction in raw cotton purchases.

The collapse, he said, is devastating Pakistan's agricultural economy, shrinking cotton output, and forcing the country to rely increasingly on imports of edible oil and textile goods, further depleting foreign reserves.

Haq emphasised that the unchecked inflow of under-invoiced yarn has crippled the local industry. 'Instead of supporting cotton growers and textile manufacturers through incentives and energy relief, the sector is being suffocated by high taxes and unaffordable power rates,' he stated, adding that the crisis has rendered hundreds of thousands of workers jobless across rural and industrial areas.

The All-Pakistan Textile Mills Association (APTMA) had earlier alerted the Federal Board of Revenue (FBR) about massive under-invoicing, claiming millions of kilograms of yarn were entering the country illegally each month.

However, authorities have yet to act, allowing imports to rise unchecked. Haq also alleged that yarn is being sold in Faisalabad's markets without proper invoices, resulting in substantial tax losses and weakening the entire cotton value chain, as cited by Dawn.

Pakistan's cotton production has plunged from around 15 million bales to just 5.5 million, with roughly 800,000 bales lying unsold due to low domestic demand. Cotton prices have crashed to PKR 8,000 per 40 kg, pushing farmers toward sugarcane cultivation, a shift Haq warned could drive up edible oil imports next year.

The ginning sector faces an overwhelming 86 per cent cumulative sales tax on cotton and related products, while textile units are burdened with old gas dues. Haq urged the federal government to impose a 20 per cent import duty on yarn and fabric, cut energy tariffs, and introduce tax relief to revive Pakistan's collapsing textile backbone, as reported by Dawn. (ANI)