The government’s decision to shift cotton export approvals from the Trade Development Authority of Pakistan (TDAP) to the State Bank of Pakistan (SBP) was made to ensure timely realisation of foreign exchange, enforce contracts, and tackle pricing issues amid a shortfall of seven to eight million bales, experts said.
The TDAP was “unable to pursue foreign exchange proceeds from exports, as it does not manage FX operations,” Arif Habib Commodities CEO Ahsan Mehanti said while talking to media.
Also read: Pakistan rice exports plunge as Indian supply returns to global markets, experts say
The Ministry of Commerce issued S.R.O. 2486(1)/2025, saying that in exercise of the powers conferred by sub-section (1) of Section 3 of the Imports and Exports (Control) Act, 1950 (of 1950), the federal government had directed that the following further amendments shall be made in the Export Policy Order, 2022, namely:
In the aforesaid Order, be substituted, namely:-
Sr. No. 9, in column (4), the following shall “(i) security deposit of 1% of the contract value with the State Bank of Pakistan and presentation of confirmation letter issued by the State Bank for the same before customs authorities along with shipping documents and ; (ii) an irrevocable letter of credit shall be opened by the buyers and the shipment of contracted quantity shall be completed within one hundred and eighty days thereof. In case of non-performance of contract within stipulated time, the security deposit shall be forfeited by the State Bank of Pakistan proportionate to the quantity not shipped”.
“Ensuring timely realisation of export proceeds requires proper monitoring, which falls under the SBP, as it maintains records of foreign exchange inflows and export refinance data,” Mehanti said.
Meanwhile, AKD Securities Research Director Muhammad Awais Ashraf said there was a pricing issue that was not handle by the TDAP. “That’s why the federal government decided to introduce SBP to tackle the situation.”
According to Ashraf, Pakistan is facing a shortfall of seven to eight million bales of cotton, and the country plans to meet this gap through imports. “To secure more competitive prices, the decision to switch suppliers has been taken.”
JS Global Head of Equity Research Waqas Ghani hailed the government decision, maintaining that the TDAP was not a financial regulator but a promotional body.
“By moving oversight to the SBP, the government ensures proper vetting of export contracts, enforcement of obligations and penalisation on non-performance via forfeiture of security deposit.
Pakistan’s cotton production has fallen sharply to 6.8 million bales in the 2025-26 season, 34% below the target of 10.18 million bales.
Earlier, Federal Committee of Agriculture (FCA) meeting held in April had fixed a production target of 10.18 million bales from 2.2 million hectares. This year, cotton was sown on 2.0 million hectares, 11.5% less than the target.
The shortfall was attributed to multiple challenges, including climate change, unexpected rains and floods, pest infestations like White Fly and Pink Bollworm, Chilli Leaf Curl Virus Disease (CLCVD), limited seed technology, and competition with other crops.
American Dollar Exchange Rate