ALTHOUGH Pakistan’s textile industry is hardly keen on buying raw materials or products from India, there are occasions when it is the only option left for it to keep its wheels moving.
This time the compelling reason is the quality of cotton, shortfall in crop output and and comparatively cheaper prices. The domestic crop has been hit by floods, pest attacks, and substandard inputs. Currently, a war of words is raging between the textile makers and parliamentarians over cotton imports from India.
The All Pakistan Textile Mills Association (Aptma) says it is the quality of local cotton that has compelled them to buy Indian fibre. The commodity held by the Trading Corporation of Pakistan is of low quality, according to Aptma chairman Tariq Saud, and it is for this reason that its members are averse to buying it. Besides, the export subsidies offered by India make their product cheaper than Pakistan’s.
The Senate Standing Committee on National Food Security and Research, in a recent meeting, asked the government to immediately stop the import of 0.5m bales of cotton from India because it would ‘ruin’ the country’s cotton economy. Earlier, on August 19, 2015, the National Assembly’s Standing Committee on Textile Industry had, in a similar move, sought a ban on the imports of cotton yarn from India, since Pakistan itself produces it.
The Senate Standing Committee on National Food Security and Research, in a recent meeting, asked the government to immediately stop cotton import from India because it would ‘ruin’ the country’s cotton economy
A senior official of the ministry of commerce informed the committee that at present about 400,000 cotton bales were available in the country. The ginners have not more than 100,000 bales of cotton, which they will trade off before the arrival of the new crop. Fearing the Aptma move may destabilise the cotton market, the Senate committee unanimously recommended immediate imposition of regulatory duty on cotton imports.
But the textile body, while opposing the duty on cotton imports from India, said that the government’s assessment about the local cotton market was based on ‘false’ data. What the industry needs is good quality cotton which was not available in the local market. It asked the Senate committee to take up the matter of crop failure and concentrate on ways to prevent such failures in the future.
At the moment, it is argued, the requirement of the industry is 16mn bales whereas the local cotton production is less than 10mn bales. If cotton imports were banned, the question arises from where would the gap of 6m bales be filled? Besides, the current year’s cotton crop as compared to the 2014-15 crop is already short by 34.32pc or 5.103m bales. Putting restrictions on imports in such circumstances can aggravate the shortage of raw materials needed by the spinning industry and even compel a number of spinning units to close down.
Federal minister for finance Ishaq Dar in his budget speech has said the failure of cotton crop by around 35pc has placed extra burden on the industry which will have to import more than five million bales of cotton to meet the consumption requirement of the spinning industry.
But Cotton Commissioner Dr Khalid Abdullah disputes the very rationale for imports as presented by the Aptma. He informed the Senate committee that Pakistan is importing extra long staple cotton from the US and some other countries and wondered why Aptma is seeking import of that kind of cotton from India. Federal Minister for Food Security Sikandar Hayat Bosan supported his contention by saying that extra-long staple is not grown in India. It is grown only in the US and African countries.
Pakistan began importing cotton from India earlier this year after rains and pests destroyed much of its crop. Commerce Minister Khurram Dastgir Khan says there has been a decline of 5.1mn bales in cotton production during the current season causing a loss of Rs200bn.The country cannot afford such huge losses and cannot import cotton due to limited resources.
The Customs Land Freight Unit (LFU) at Wagah collected Rs13mn in taxes/duty on the import of Indian cotton yarn during first ten months of the current fiscal year. It collected Rs16mn in the same period last fiscal year.
According to the details, Pakistan imported cotton yarn worth Rs1,719mn from India through the Wagah border during the same period, against Rs1,685mn during the corresponding period of last year. The overall cotton imports are seen climbing to at least four million bales in the year that started on August 1, 2015 from 1.2mn bales in the previous year.
Latest:
According to latest reports India has contracted to import 20,000 bales of cotton from Pakistan for shipment this month after Indian prices jumped because of limited supply.
The move is a role reversal from earlier this year, when Pakistan was buying cotton from India after its output had been hit by bad weather.
Published in Dawn, Business & Finance weekly, June 27th, 2016
