Indo-Pak tensions hit Pakistan's cotton trade

Pakistani textile sector has been hit badly by the rise in Indo-Pak tensions with most traders not buying cotton from India as a gesture of national solidarity, impacting the $822 million cotton industry.

The traders across the border, being uncertain of future developments, are not entering into new deals.

Pakistan's Cotton Commissioner Khalid Abdullah said a low quantum of trade activity is still in place. The government has not asked importers to stop buying cotton from India but many of them are not buying on their own as a "gesture of national solidarity".

Pakistani spinners are the biggest buyers of Indian fibre. Fewer imports by Pakistan this year could hurt Indian exports, raise their prices and help rival cotton exporters like Brazil, the US and some African countries.

 

For Pakistan's industry, buying the raw material from other sources may prove costly owing to long distance freight, Dawn reported.

Cotton trade between the two countries is worth $822 million a year.

The suspension in cotton trade comes at a time when Pakistan's cotton crop has recorded an overall decrease of 15 per cent over the last year, adding to the industry's woes.

Pakistan, the world's third-largest cotton consumer, starts importing from September, but this time, there has been little activity so far.

In the 2015-16 financial year ending on March 31 in India, official trade between the two was $2.6 billion with cotton being a major component.

However, in the crop year that ended on September 30, Pakistan was India's biggest cotton buyer after its own crop was hit by drought and whitefly pest. According to an estimate, Pakistan will need to import at least three million bales in FY17.

Trade balance between the two countries is in favour of India. In FY16, exports from Pakistan to India dropped to $400 million from $415 million in FY15. India's exports to Pakistan surged 27 per cent to $1.8 billion over the same period.