In a significant policy shift, the Pakistani government has transferred the responsibility for managing cotton exports from the Trade Development Authority of Pakistan (TDAP) to the State Bank of Pakistan (SBP). This decision, formalized through an amendment to the Export Policy Order 2022 via S.R.O. 2486(I)/2025 issued by the Ministry of Commerce, aims to strengthen oversight and ensure greater accountability in the cotton export sector.
The amendment replaces previous provisions, introducing stringent requirements for exporters. Now, cotton exports mandate a 1% security deposit of the contract value with the SBP, accompanied by a confirmation letter from the central bank for customs clearance. Additionally, buyers must open an irrevocable letter of credit, and exporters are required to complete shipments within 180 days of the contract.
Implications for Exporters and Economy
Failure to ship the contracted quantity on time will result in proportionate forfeiture of the security deposit by the SBP, a measure designed to deter delays and non-performance. This move comes amid ongoing challenges in Pakistan’s cotton sector, including fluctuating production levels and the need to boost export reliability.
Industry stakeholders view this as an effort to mitigate risks associated with international trade commitments, particularly in a sector vital to Pakistan’s economy. Cotton remains a key agricultural commodity, supporting millions of livelihoods and contributing to textile exports, which form a backbone of foreign exchange earnings.
While the handover centralizes control under the SBP’s banking expertise, it may impose additional financial burdens on exporters through the security deposit. Proponents argue it will promote discipline and timely executions, potentially enhancing Pakistan’s reputation in global markets.
The change reflects broader governmental efforts to refine export policies under the Imports and Exports (Control) Act, 1950. As Pakistan navigates economic pressures, this reform could play a pivotal role in stabilizing cotton trade flows.