Tax raids push Pakistan's cotton ginning industry to the brink

Dawn reported on 22 October that FBR teams entered ginning factories without notice in Sanghar, Tando Adam and Shahdadpur, within the jurisdiction of the Hyderabad Regional Tax Office. Ginning is the first industrial link in the chain, separating harvested seed cotton into lint and cottonseed; a stoppage there passes straight through to spinning and oil mills. Industry representatives say the teams broke locks and seized financial records without legal notice. Express reports that the FBR has also begun monitoring activity at textile mills with cameras. The FBR's response to the allegations could not be verified as of 22 October.

Sohail Mehmood Harral, chairman of the Pakistan Cotton Ginners Association, warned at a press conference in Multan that every operating plant would close if the raids did not stop. The association sent urgent letters to the prime minister, the finance minister, the finance adviser and the FBR chairman, asking for legal notices instead of raids. Ihsanul Haq, chairman of the Cotton Ginners Forum, said panic had led more than 100 factories to close in 2025-26. Industrialists say more than 500 ginneries, about 700 oil mills and 175 textile mills are idle nationwide, with the sales tax burden between 18% and 22%.

According to Express, the commerce ministry, on the prime minister's instructions, has formed a high-level committee chaired by the Minister of State for Finance to review the Export Facilitation Scheme (EFS). Behind the clash lies a structural constraint: pressure to widen the tax base is falling on an agro-industry where the informal economy weighs heavily. Expensive electricity and rising production costs are also eroding the sector's capacity to absorb shocks. Because the raids coincide with the busiest weeks of the harvest, the risk of a pause in seed cotton purchases is rising.