The political standoff between India and Pakistan is causing India a loss of around 15 lakh bales of cotton exports. India discontinued the Most Favored Nation status granted to Pakistan after the Pulwama attack in 2019, resulting in 11 per cent duty being imposed on Pakistan’s cotton imports from India.

Fall in Indian cotton prices to benefit Pakistan

Currently, cotton prices in Pakistan are going through the roof. As per Hindu Business Line, raw cotton (kapas) costs Rs 5,560 per maund in Pakistan, the highest in 11 years. Meanwhile production for the current marketing year (August 2020-July 2021) has declined by 24 per cent to 60.19 lakh bales (of 170 kg), says an USDA report. Farmers have reduced cotton cultivation by 10 per cent, while the crop has also been hit by a heavy monsoon and severe pest infestation.

Global cotton prices have also increased sharply since June last year to Rs 50,050 per candy of 356 kg now. Since the beginning of this year, cotton prices have increased by over 11 per cent in the global market. On the other hand, prices of Shankar-6 cotton, India’s major export crop have fallen below Rs 47,000 a candy. Pakistan can benefit from this fall by acquiring cotton at competitive prices and saving freight charges by transporting the required cotton by trucks or shipping it from one of the western ports.

However, February 2019 Pulwama blast has halted trade between India and Pakistan. In retaliation to India withdrawing its Most Favored Nation status, Pakistan discontinued imports from India. PK Agarwal, Chairman and Managing Director Cotton Corporation of India (CCI) has urged Pakistan to withdraw this duty on cotton.

Ample stocks available for exports

CCI currently has 65 lakh bales of cotton stock with it. It is also well-placed to meet export demand as it carries record cotton stocks from last year. Cotton Association of India (CAI) also has carryover stocks of 125 lakh bales. Hence, ample cotton is available with India for exports. However, no one from the Pakistan government or trade has yet approached it for supplying cotton to Pakistan, said Atul Ganatra, President, CAI.

Besides cotton, India can also supply cotton yarn to Pakistan. Its garment manufacturers have been urging the government to allow import of cotton yarn from India. Value-added textile manufacturers have also demanded permission to import cotton yarn from India as the currently available cotton yarn is not of good quality and is expensive. However, the spinning mills have opposed this move as they believe it would prove disastrous for the domestic spinning sector.