Pakistan wants India to open up its markets for textiles imports. Exporters in Pakistan say India has to dismantle its tariff and non tariff trade barriers. Since Pakistani textiles have opened outlets in Dubai, London, New York, Toronto and many other countries, where Indians live in large numbers, the next step would be to reach out to the over one billion plus population living in India itself.
However, India and Pakistan face vastly differing situations. Electricity cost in Pakistan is 15 cents per unit compared with only 9 cents in India. Interest rates in Pakistan are 20 per cent higher than India’s, increasing the financial cost of the industry. India is a net exporter of cotton after fulfilling its domestic needs while cotton production in Pakistan always remains short, forcing the industry to resort to import of this vital input.
India has a very liberal regime of rebates and subsidies. It for example provides 3 per cent rebate on export of yarn and fabric. This further reduces the cost of Indian textiles. Besides various subsidies offered by the states the central government in India provides 2 per cent rebate on interest to its industries for upgradation of technology.
