PM’s Advisor on Commerce and Investment Abdul Razak Dawood on Monday was granted approval to import cotton yarn through land route (including India) to tackle the domestic shortfall and bring down the prices in the domestic market.
The import of these raw materials would also lead to a revival of the trade relations between the two neighbors which had deteriorated in August 2019 when India revoked Article 370 of its constitution that granted occupied Kashmir a special status.
The value-added sector heaved a sigh of relief ever since it was announced that the government is planning to resume bilateral trade with India and would allow import of cotton yarn. Presently, cotton and yarn imports are allowed from all countries except India.
According to Dawood, a meeting was held with the prime minister where rising prices of the cotton were discussed. PM Khan was concerned about the value-added sector and said that it was necessary to allow import of cotton from India to ease the pressure on yarn and maintain the momentum of cotton exports.
“All steps will be taken through cross-border imports of cotton including by land. A summary will be presented at the next ECC meeting to ensure availability of cotton and yarn in the coming months,” he said.
The National Assembly’s Standing Committee on Commerce has also supported the idea of importing cotton from India where it is cheap, adding that the import of expensive cotton would have trickledown effect on value-chains.
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.
APTMA opposes cotton import from India
It was reported that 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.
Speaking to GVS, Senior Executive APTMA, Saad Umar said that the association was not exactly against the import of cotton from India but it believes that it should not be done at the cost of the domestic industry.
Pakistan is going to import cotton from India at subsidized rates which would prove disastrous for the domestic producers, said Umar. The government should instead undertake measures to support the local industry so that it is able to provide yarn at affordable prices, he added. If the cotton yarn is imported at low prices from India, the demand for local yarn will decrease and the prices will fall and this would have dire consequences for the small businesses, he warned.
Umar further stated that since the Pulwama incident the political situation has not been conducive for imports and though Pakistan is keen on resuming bilateral trade with India, no favorable response has been received from the latter as yet.
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.