Pakistan should import cotton from neighbouring India to avoid another balance of payment crisis, said Pakistan Textile Council (PTC) in a statement. The country’s textiles industry, which earned more than $19 billion in exports last year, is facing a shortage of raw material as flash floods have damaged about half of the nation’s cotton produce since June. “The unprecedented rainfall resulting in floods has caused havoc in Pakistan,” said the PTC.
One-third of Pakistan is submerged in water, thousands of homes have been destroyed, more than 1,500 people have lost their lives, and most importantly, about 18,000 sq km of cropland has been ruined, including about 45% of the cotton crop.
The country will face a cost far greater than $10 billion in damages, with the loss of food crops alone amounting to about $2.3 billion, a particularly heavy burden at a time of rising food prices worldwide. Pakistan is a major producer of rice and cotton, and both crops have suffered severe damage.
As part of the devastation, flood damage will likely force Pakistan to increase cotton imports when production in the US is forecasted to plunge by 28% due to drought. And with restrictions on China, Pakistan will not be able to procure raw materials from there as well, the Council said.
The outlook for Brazil is also not very encouraging. According to ABRAPA, the drought there has already dried up an estimated 200,000 tons of cotton supply. All these factors are causing the price of cotton to increase in local and international markets.
The PTC said that with the continuous depreciation of the rupee and a record high shipping freight, importing cotton from far-located countries like the US, Brazil, Egypt, etc., will not be economically viable.
Last year, 2021-22, Pakistan’s textile exports rose to an all-time high of $19.3 billion but even achieving this mark would be challenging given the no availability of raw materials to factories. The Council said that it was imperative for Pakistan to keep its export growth momentum to finance the import bill, keep the balance of payment situation manageable, and avoid default conditions.
“Importing raw cotton from India must be immediately allowed to mitigate the raw material shortage,” it said. The move will help Pakistan reduce trade time and curtail high logistics costs. “The declining textile exports will lead to the balance of payment crisis, and reduced productivity will put millions of jobs at stake, which the country cannot afford,” the Textile Council warned.
The declining textile exports will lead to the balance of payment crisis, and reduced productivity will put millions of jobs at stake, which the country cannot afford,” the Textile Council warned.