Time to ‘cement’ India-Pakistan tiesFebruary 28th, 2008 - 11:12 pm ICT by admin
By Devirupa Mitra
Islamabad, Feb 28 (IANS) It’s time to cement ties - with Pakistan’s cement manufacturers hoping to ramp up exports now that the uncertainty over the elections has ended and the construction season in India is beginning. “Due to the elections, there was a bit of uncertainty among buyers and sellers, so things had slowed down. Now that things are settling down, exports (to India) should pick up,” said Saifuddin Khan, general manager of marketing at Lucky Cements, one of Pakistan’s largest cement companies.
“February also marks the start of the construction season in India till the onset of monsoons, so we expect an increase in demand for Pakistani cement,” Khan told a visiting IANS correspondent.
Pakistani cement found Indian buyers after the Bureau of Indian Standards licensed 12 companies last September.
India has an acute shortage of cement and prices are high. Pakistan, on the other hand, produces more cement than it requires.
The importance of cement in bilateral trade is set to increase, with Pakistani officials saying that it could be the “single biggest export item” in the current financial year.
According to official figures, till Jan 31, more than 230,000 tonnes of cement have been exported to India in the last five months, worth over $16.5 million, at about $70 (Rs.2,800) a tonne.
Pakistan has surplus production capacity of about 12 million tonnes after meeting its domestic demand.
With cement likely to dominate trade in coming years, it is also likely to improve the trade balance, which is now heavily tilted in favour of India.
It had been a slow start for exports in the first two months, with Indian buyers taking small steps towards a neighbour to buy cement required to keep pace with big infrastructure projects for a rising Indian economy.
“Indian buyers were very cautious,” said Khan. “They were giving orders for 200 tonnes, so that they could check out the duty structure and figure out how to get the supply out of customs.”
After that, the assassination of Benazir Bhutto and general elections made things uncertain in Pakistan, which affected the business environment.
Now that things have started looking up again, Pakistani manufacturers hope to sell more through the existing rail link and a proposed road connection.
According to Pakistani exporters, nearly 70 percent of trade is through sea from Karachi to Mumbai, with the rest of it being through the rail link at the Wagah-Attari border.
“Not only is the cost higher in transportation through the sea route but the price in Mumbai and neighbouring areas is lower than in Punjab and Haryana,” said Maple Leaf Cement Factory’s CEO, Sayeed Tariq Saigol.
Therefore, Pakistani exporters had been trying to ease the “capacity constraint” in freight by lobbying their government to improve the quality of wagons and railway lines.
“There was only one interchange daily of 1,500 tonnes, which was increased to twice daily last week,” he said.
There are also reports that Pakistan may further increase the number of trains to haul cement to the border.
Besides, both the governments had been negotiating for supply through trucks, but Pakistani manufacturers are not holding their breath.
“On both sides, security concerns are unlikely to allow for a quick start to the road link,” said Khan.
Further, Saigol said, they were not getting as good a price in the Indian market, “as price has been driven down due to competition between us”. He noted that Indian cement companies were expanding production but doubted that it would be able to meet rising demand.
Currently, Pakistan sells cement for about Rs.140-150 per bag, while prices for Indian cement have gone to over Rs.250 per bag.
Meanwhile, Pakistani exporters point out their cement is of a higher quality than Indian cement, as it has negligible ash content and is “pure limestone”.
Tags: acute shortage, bilateral trade, bureau of indian standards, cement companies, cement manufacturers, construction season, duty structure, five months, india pakistan, indian economy, infrastructure projects, last september, mitra, monsoons, pakistani officials, rs 2, saifuddin, small steps, surplus production, trade balance