Source: Business Recorder


Sep 27, 2022
KARACHI: Textile sector has urged the federal government to allow the import of raw cotton from neighbouring India to mitigate the raw material shortage for value added textile sector, which earned some $19 billion for the national exchequer during the last fiscal year.

“The government of Pakistan should allow import of cotton from India to meet the demand of the export-oriented industries,” said Pakistan Textile Council (PTC), a representative body of leading value added textile exporters, on Monday. The country’s textiles industry is facing a shortage of raw material as flash floods have badly affected the cotton production. Pakistan is a major producer of rice and cotton, and both crops have suffered severe damages.

The country was already facing massive shortage of cotton, the unprecedented rainfall and floods have caused more damages to the standing cotton crops across the country. As per estimates, some 40 to 45 percent the cotton crop has damaged due to recent rainfall and floods. Overall, one-third of Pakistan is submerged in water, thousands of homes have been destroyed, more than 1,500 people have lost their lives and most importantly about 18,000 sq km of cropland has been ruined.

According to PTC, the country will face a cost far greater than $10 billion in damages due to rains and flood, 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.

As part of the devastation, flood damage will likely force the country to increase cotton imports at a time when production in the US is forecasted to plunge by 28 percent due to drought. In addition, with restrictions on China, Pakistan will not be able to procure raw materials from there as well.

The outlook for Brazil is also not very encouraging and the drought there has already dried up an estimated 200,000 tons of cotton supply, the PTC said.

All these factors are causing the cotton prices to increase in local and international markets. Given the continuous depreciation of the rupee and a record high shipping freight, import of cotton from far-located countries like the US, Brazil, Egypt, etc, will not be economically viable for Pakistan.

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 no availability of raw material to factories, it added.

Therefore, PTC has demanded that import of raw cotton from India must be immediately allowed to mitigate the raw material shortage and avoid another balance of payment crisis.

The Council 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. The cotton import from India will 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 on stake which the country cannot afford,” the Textile Council warned. Commutatively, the country will need to import some 5 million bales this year.

Last year, Pakistan imported some 3 million cotton bales and this year needs to import an additional quantity of some 2 million bales due to flood. (Source: Business Recorder)