Cot­ton im­port from In­dia

The Pak Banker - - Editorial -

Dev­as­tat­ing floods in Pak­istan may have de­stroyed up to one fifth cot­ton crop, will give the op­por­tu­nity to ex­porters of In­dia who are eye­ing the short­fall. In­dian ex­porters to take ad­van­tage of a govern­ment de­ci­sion to lift a ban on ex­ports to help meet de­mand from Pak­istan's tex­tile in­dus­try. The re­stric­tion was im­posed in April to keep do­mes­tic prices down. Armed with a bumper crop af­ter a good monsoon, In­dian groups are ex­pected to be­gin ex­port­ing to Pak­istan from Oc­to­ber. Pres­i­dent of the Cot­ton As­so­ci­a­tion of In­dia said that We aret ready to meet Pak­istan's ap­petite, whose mem­bers in­clude more than 400 lead­ing cot­ton grow­ers, gin­ners and ex­porters. Pak­istan's tex­tile sec­tor, which ac­counts for 60 per cent of the coun­try's ex­ports, is likely to be hit due to dam­age to the cot­ton crop, which could be 20 per cent be­low usual, ac­cord­ing to an­a­lysts. "Large fields of cot­ton have been washed away by the floods. Pak­istan will be short of about three mil­lion bales, which will bur­den our al­ready frag­ile econ­omy by at least $1 bil­lion. The flood­ing in Pak­istan may re­sult in agri­cul­tural losses of nearly $3 bil­lion with the main farm­ing re­gion of Pun­jab. Pak­istan has been im­port­ing cot­ton from In­dia for the past few years now and should do the same now when it face a huge cri­sis. It is per­ti­nent to note that Pak­istan is one of the main im­porters of cot­ton from In­dia, which is the sec­ond largest pro­ducer of the crop world­wide af­ter China. Some millers are fear­ing a spurt in de­mand from Pak­istan could pushed up prices. In­dia will pro­duce nearly 32 mil­lion bales of cot­ton in 2010-11, against 28 mil­lion bales in 2009-10. In­dian in­fla­tion, af­ter hit­ting dou­ble fig­ures ear­lier this year be­cause of high food prices, is now in de­cline, but is still the high­est of the Group of 20 na­tions at 9.97 per cent. "Ex­ports may be capped if Septem­ber rains hurt the crop," said an an­a­lyst with Mum­bai-based bro­ker­age Sharekhan. De­spite the Pak­istan is a ma­jor cot­ton pro­ducer coun­try now it will be forced to im­port the cot­ton to meet coun­try's mills needs. So In­dia will take ben­e­fit of this sit­u­a­tion and earn the huge for­eign ex­change. Now it is the duty of the Pak­istan govern­ment to give in­cen­tives and soft term loans to farmer of the af­fected ar­eas for sow­ing the cot­ton to meet the next year's de­mand.

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