Cotton cess increase remains pending despite ECC-backed formula

LAHORE: A long-delayed increase in cotton cess has still not been put into effect despite repeated high-level meetings, policy directions and an approved formula endorsed by the Economic Coordination Committee (ECC), according to details reported in recent official deliberations.

The continued hold-up has intensified concerns over the financial position of the Pakistan Central Cotton Committee (PCCC) and is also affecting broader efforts aimed at reviving the cotton sector.

During the sixth meeting of the Cabinet Committee on Essential (Cash Crop) Commodities on Oct 22, 2025, chaired by Deputy Prime Minister Muhammad Ishaq Dar, participants unanimously decided that cotton cess would be collected in line with the existing law and the ECC’s 2011 decision. The committee also approved collection through the Federal Board of Revenue (FBR).

The same meeting endorsed the signing of a Memorandum of Understanding between the Ministry of National Food Security & Research (MNFS&R)/PCCC and the FBR. It also backed majority representation for the cotton industry in the Pakistan Cotton Advisory Council (PCAC) or the PCCC Board of Governors, while recommending that a major portion of the cess collected be earmarked for research and development.

Despite those decisions, no implementation has taken place so far. The MNFS&R has not acted on repeated reminders sent by the PCCC.

Issue dates back to 2011

The delay is part of a much older issue that stretches back to 2011. That year, the ECC agreed in principle to raise cotton cess and formed a committee to examine the PCCC’s research needs.

In May 2011, that committee recommended increasing the cess from Rs20 to Rs50 per bale of 170 kilograms. It also proposed a 30 per cent increase every three years to keep pace with rising research and development expenses.

In July 2012, the federal cabinet put that decision into effect under the Cotton Cess Act 1923, fixing the rate at Rs50 per bale from July 1, 2012. A schedule was also laid down for further increases in 2015, 2018, 2021 and 2024.

However, more than 14 years later, the increase still has not been implemented. Under the ECC-approved formula, the current cess rate should now be Rs142.80 per bale. This figure was also recognised as legally valid during meetings held in 2025.

Cotton revival plan and later objection

An inter-ministerial meeting chaired by Deputy Prime Minister Ishaq Dar on Dec 5, 2025, approved a Cotton Revival Plan. But the All Pakistan Textile Mills Association (Aptma) later raised objections to the minutes of that meeting and suggested that the cess be capped at Rs100 per bale.

Committee members, however, recommended that the rate should be fixed strictly in accordance with the legal formula already approved.

The unresolved matter has kept the revised cess structure from being enforced, even after multiple official forums reaffirmed the legal and policy basis for its collection.