Pakistan might allow cotton import from India through land route as the prospects of gradual restoration of bilateral trade ties with India have increased after a deal to maintain peace at Line of Control.
Adviser to the Prime Minister on Commerce Abdul Razak Dawood had rejected the possibility of importing cotton from India to tackle the domestic shortfall, just two weeks ago. However, the breakthrough over 2003 ceasefire agreement on the Line of Control between Pakistan and India has compelled the Ministry of Commerce to reevaluate its decision.
According to reports, the final decision on whether Pakistan would import cotton or yarn from India would be taken by the Minister next week. PM Khan has already been alerted about the cotton shortfall and once a conscientious decision is taken, a formal summary would be presented before the Economic Coordination Committee of the cabinet, revealed sources.
It is being said that in-house discussions on whether cotton should be imported from India to bridge the yawning domestic shortfall have already begun but the final approval of the decision lies with PM Khan who also holds the portfolio of the commerce minister.
“I cannot say yes or no at this stage and would be in a better position to respond on Monday,” Mr. Dawood said while responding to a question on whether Pakistan was considering allowing cotton import from India.
Though India and Pakistan had signed a ceasefire agreement in 2003, it had hardly been followed in over the past several years.
On Feb. 25 however, both countries issued a joint statement to strictly observe all agreements on ceasefire along the LoC and other sectors after the hotline discussions by their Director Generals of Military Operations.
I welcome restoration of the ceasefire along the LOC. The onus of creating an enabling environment for further progress rests with India. India must take necessary steps to meet the long-standing demand & right of the Kashmiri people to self determination acc to UNSC resolutions.
— Imran Khan (@ImranKhanPTI) February 27, 2021
Prime Minister Khan on Feb. 27 welcomed the ceasefire agreement with India and said Islamabad is ready to move forward to resolve “all outstanding issues” through dialogue.
Pakistan’s cotton crisis
Reports suggest that against annual predicted consumption of minimum 12 million bales, the Ministry of National Food Security and Research expects only 7.7 million bales production this year. However, cotton ginners have given the lowest production estimates of only 5.5 million bales for this year.
According to the Pakistan Bureau of Statistics, Pakistan has imported around 688,305 metric tonnes of cotton and yarn while there is a minimum shortfall of six million bales. A gap of about 3.5 million bales is present that the government would need to fill through imports.
Due to the rising decline in cotton production, users were forced to import from United States, Brazil and Uzbekistan.
Imports from India, however, would be much cheaper and would arrive in Pakistan in three to four days.
However, All Pakistan Textile Mills Association (APTMA) is pressurizing Pakistan government not to allow cotton and yarn import from India. APTMA said in an appeal to Dawood that the import of cotton would directly affect cotton prices in Pakistan.
It is being reported that a number of millers have already hoarded the cotton and were now charging exorbitant and import would dampen their short-term earnings.
According to APTMA, the cotton sowing season is currently starting in Pakistan and the predicted drop in cotton price owing to import of yarn from India is approximately 10-15%, dissuading farmers to not sow cotton.
Last month, Minister for National Food Security and Research Syed Fakhr Imam while chairing a meeting said that the year 2020 would be a kill or cure situation for the cotton crop. The last few years of declining acreage, dropping per acre yield and sinking national production are testament to the fact that it is an increasingly challenging time for the industrial crop.