Pakistan's textile mills are alarmed over rising imports of finer counts yarn (above 30 counts) at cheaper rates from India. The government has allowed the state-owned Trading Corporation of Pakistan (TCP) to procure one million cotton bales to help growers get a better price for their produce.
Mills say the TCP should not be allowed to intervene in the free market mechanism being followed in the cotton economy for the last 18 years. They say this would lead to huge losses to the national exchequer because cotton prices the world over are depressed this season.
However there is a view that the TCP’s intervention can help cotton growers get a better price. It will encourage the spinning industry to go in for less expensive cotton from India. Even if the landed cost of imported cotton from India comes to around Rs 5,400 it would be cheaper. It would be contamination-free and will also have no storage cost, which will have to be incurred for domestic cotton.
India is harvesting a bumper cotton crop this season which could touch 40 million bales, the highest in world production followed by China. There was a time when China was a major buyer of cotton. However, for the last couple of years, China is buying only quality lint. The country is presently supplying cotton to its industry from domestic stocks accumulated since 2009.
