Cotton Trade Suffers Seeing that India-Pakistan Political Standoff Continues

The political standoff between India and Pakistan is leading to India a lack of around 15 lakh bales of cotton exports. India discontinued the Just about all Favored Nation position granted to Pakistan following the Pulwama attack in 2019, leading to 11 per cent duty getting imposed on Pakistan’s cotton imports from India.

Presently, cotton prices in Pakistan 're going through the roof. As per Hindu Business Line, natural cotton (kapas) costs Rs 5,560 per maund in Pakistan, the best in 11 years. Meanwhile development for the existing marketing year (August 2020-July 2021) has declined by 24 % to 60.19 lakh bales (of 170 kg), says an USDA report. Farmers have lowered cotton cultivation by 10 per cent, while the crop has also been hit by much monsoon and extreme pest infestation.

 At the beginning of this year, cotton prices have increased by over 11 per cent in the global market. On the other hand, rates of Shankar-6 cotton, India’s key export crop possess fallen below Rs 47,000 a candy. Pakistan can benefit from this fall by obtaining cotton at competitive prices and saving freight costs by transporting the mandatory cotton by trucks or shipping it in one of the western ports.

Nevertheless, February 2019 Pulwama blast features halted trade somewhere between India and Pakistan. In retaliation to India withdrawing its Most Favored Nation position, Pakistan discontinued imports from India. PK Agarwal, Chairman and Handling Director Cotton Company of India (CCI) possesses urged Pakistan to withdraw this duty on cotton.

CCI currently has 65 lakh bales of cotton inventory with it. It is also well-placed to meet up export demand as it carries record cotton shares from this past year. Cotton Association of India (CAI) also offers carryover shares of 125 lakh bales. Consequently, ample cotton is available with India for exports. Even so, no person from the Pakistan government or trade has however approached it for providing cotton to Pakistan, said Atul Ganatra, President, CAI.

Besides cotton, India may also source cotton yarn to Pakistan. Its garment makers have already been urging the government to allow import of cotton yarn from India. Value-added textile manufacturers also have demanded authorization to import cotton yarn from India as the available cotton yarn is not of good quality and is expensive. On the other hand, the spinning mills possess opposed this move because they believe it would prove disastrous for the domestic spinning sector.