The Imran Khan government may allow cotton import from India via land route and the decision could be taken as early as this week, ET has learnt. Trade ties were snapped unilaterally by Pakistan in 2019 following India’s decision to abrogate Article 370 of the Constitution.
The proposed move viewed as a ‘confidence building measure’ surprisingly contradicts the position of Abdul Razak Dawood, adviser to Pakistan Prime Minister Imran Khan on commerce, who a few weeks back had ruled out the possibility of importing cotton from India to bridge the domestic shortfall.
The Economic Coordination Committee of the Khan cabinet will take a final decision on the matter, according to a report in Pakistani daily The Express Tribune. Khan also holds the commerce portfolio.
Against the annual estimated consumption of minimum 12 million bales, Pakistan’s ministry of national food security and research expects only 7.7 million bales production this year. However, cotton ginners have given the lowest production estimates of only 5.5 million bales for this year.
There is a minimum shortfall of six million bales and the country has so far imported roughly 688,305 metric tonnes of cotton and yarn, costing $1.1 billion, according to the Pakistan Bureau of Statistics. There is still a gap of about 3.5 million bales that needs to be secured through imports.
India is the second largest cotton producer after the US. Imports from India would be cheaper and reach Pakistan in three to four days, while imports from other countries would take one to two months, according to sources.
Pakistan’s economy is facing an acute crisis. The Khan government took $6.7 billion of foreign loans between July 2020 and January 2021, as against $380 million of foreign loans in the same period of the previous fiscal, The Express Tribune said, quoting Pakistan’s ministry of economic affairs. These loans included a new commercial loan of $500 million from China last month.
China’s continued financial assistance to Pakistan has helped in keeping the gross official foreign exchange reserves at around $13 billion despite the suspension of the International Monetary Fund (IMF) programme, negative growth in exports and major debt repayments to Saudi Arabia and other creditors. State-owned enterprises such as PIA and Pakistan Steel Mills have become bankrupt.
Pakistan’s foreign debt and liabilities have mounted by $3 billion or 2.6% during the six months period ended in December last year.