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Cotton exports to India likely to create further turmoil
Jul '08
Senior economists fear that the Government decision to allow export of cotton to India will lead to a shortage of cotton in the local industry and might ultimately lead to large scale unemployment.

Cotton being the major input of the textile industry is also the major source of earning foreign exchange revenues by value addition and generating employment in the Pakistan. However, this sector which accounted for about 68 percent of the export earnings, has already recorded a plunge of 10 percent.

The last decade has been marked by serious drawbacks including use of outdated technology, poor quality and low productivity; in spite of which there have been significant gains in the industry. But now, it's time that cotton production is given proper attention because in the midst of growing demand the country has started facing a shortfall in output.

Deteriorating condition of the industry and glaring facts like reduction in acreage and increasing cost of production is being brushed aside for long. As a result Pakistan is likely to miss its sowing target of 7.9 million acres by almost 20 percent due to unavailability of certified seeds. Moreover, insufficient supply of water and high cost of running tube wells on power and diesel is also adding to the existing crisis.

All of this has forced cotton growers to switch to other crops which in turn may widen the present gap of 4.5 million bales. Therefore, the recent decision to allow export of cotton to India will only aggravate the situation since Pakistan is anyways likely to miss this years' target of 14.11 million bales.

This apart, absence of a pesticide manufacturing policy as well as import regulatory regime is promoting counterfeit brands and is also simultaneously preventing this sector from getting adequate investments.

Furthermore, local millers will need to import higher priced cotton from the international market which again will make the domestically produced finished goods less competitive in the global market. Pakistan spent some $1.2 billion last year for importing cotton bales.

To add to the existing adversities, the recent hike in prices of gas and power has virtually led the textile industry to the brink of collapse. Already cost of doing business is making exporters fear new ventures while a considerable drop in foreign orders has become a cause for worry. This is precisely why experts detest export of cotton because it is bound to result in shooting up of prices in turn creating more trouble for the industry.

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