Thaindian News

By Awais Saleem
Islamabad, Oct 18 (IANS) With India suspending its export of cotton, the Pakistani textile industry is worried, as it was banking on import of one million bales of the commodity from its neigbour to sustain its order books.

Hit by the recent crop damage on account of floods and high prices of clothing material, Pakistani traders had placed orders for importing one million bales of cotton between November and January from neighbouring India.

But the office of India’s Textiles Commissioner that controls export and import of the commodity has suspended fresh registrations for exports, leaving the Pakistani cotton traders worried that their orders may not materialise into actual deliveries.

“This has given an excuse to some Indian exporters, who say they could not get themselves registered, as they were expecting the registration process to go on for a month,” said Naseem Usman, chairman of the Karachi-based Cotton Brokers Forum.

“Now some people are saying we may get only 25 percent of the total contracts booked or the shipments may be delayed,” Usman said. “Uncertainty about the Indian deals has also sent cotton prices soaring in the domestic market.”

Cotton price in Pakistan has reached as high as Rs.7,600 (about $88) per maund (which equals 37.32 kg).

“Some Indian exporters are saying they want to deliver their orders, but are facing difficulties from their government,” said S.M. Imran, a senior textile official whose mill imports Indian cotton.

“It appeared Indian exporters were looking to escape their contracts and some Karachi-based traders said it was because of rising international cotton prices,” Imran added.

The Pakistani textile industry feels any cancellation of Indian contracts or even delays in shipments would spell trouble for the industry, which accounts for about 60 percent of the country’s total exports.

Textile firms in the world’s third-largest cotton consuming nation were hoping to import from neighbouring India, the second-largest producer, after the massive damage to domestic crop, resulting in an estimated shortfall of about 3 million bales.

Flash floods in August and September had left more than 20 million people displaced and over one million acres of fertile land submerged. The areas in south Punjab and interior Sindh, the largest producers of cotton, were the most affected.

Pakistan in April had hoped to produce 14 million bales of cotton in the 2010-11 season, compared with around 12.7 million bales in the previous season, when the country had to import about 2 million bales.

Because of floods, government and industry officials now estimate an output of about 11.6 million bales of 170 kg (374.8lb).

US cotton prices also climbed to a record high in early Asian trade Friday, and touched $1.198 per pound, buoyed by a rally in Chinese cotton prices and wider weakening trend in the US dollar.

“If we don’t receive the cotton at this time, prices of cotton will go higher and that will create further problems,” Imran said.

(Awais Saleem can be contacted at ians.pakistan@gmail.com)