By Our Correspondent | September 27, 2022
KARACHI: Pakistan should import cotton from neighbouring India to avoid another balance of payment crisis, said Pakistan Textile Council (PTC) on Monday.
The country’s textiles industry, which earned more than $19 billion in exports last year, was facing a shortage of raw material as flash floods have damaged about half of the nation's cotton produce since June, PTC said in a statement.
“The unprecedented rainfall resulting in floods has caused havoc in Pakistan,” it said. One-third of Pakistan was submerged in water, thousands of homes have been destroyed, more than 1,500 people have lost their lives and most importantly about 18,000 square kilometres of cropland has been ruined, including about 45 percent of the cotton crop.
Pakistan faces a cost far greater than $10 billion in damages, with the loss of food crops alone amounting to about $2.3 billion, a particularly heavy burden at a time of rising food prices around the world, the council noted. Pakistan is a major producer of rice and cotton, and both crops have suffered severe damages.
As part of the devastation, flood damage would likely force Pakistan to increase cotton imports at a time when production in the US was forecasted to plunge by 28 percent due to drought.
The council said that with restrictions on China, Pakistan would not be able to procure raw materials from there as well. Outlook for Brazil has also not been very encouraging.
According to ABRAPA, the drought there has already dried up an estimated 200,000 tonnes of cotton supply.
All these factors were pushing the price of cotton higher in the local and international markets. Given the continuous depreciation of the rupee and record high shipping freight, importing cotton from far-located countries like the US, Brazil, Egypt, etc would not be economically viable, the PTC said.
Last year, 2021-22, Pakistan’s textile exports rose to an all-time high of $19.3 billion, but even achieving this mark would be challenging given the lack of availability of raw material to factories.
The PTC said that it was imperative for Pakistan to keep its export growth momentum to finance the import bill and keep the balance of payment situation manageable and avoid default conditions.
“Import of raw cotton from India must be immediately allowed to mitigate the raw material shortage,” it said. The move would help Pakistan reduce trade time and curtail heavy logistics costs.
“The declining textile exports will lead to the balance of payment crisis, and reduced productivity will put millions of jobs at stake, which the country cannot afford,” the PTC warned.