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APTMA urges Govt to discuss cotton contracts issue with India
02 Feb '11
3 min read
Chairman All Pakistan Textile Mills Association (APTMA) Gohar Ejaz has lamented over 'engineered default' by the Indian cotton traders in connivance with government policymakers, meddling into the cotton trade affairs repeatedly to delay shipments of contracted cotton deals to Pakistan.
He said despite producing 32.5 million cotton bales this year, 10 percent upward growth comparing with last fiscal year, the Indian government has made amendments in notifications relating to cotton trade vide Notification No. 12(RE-2010)/2009-14 dated 16th December 2010 to distort the free market mechanism.
According to the amendment, the contracts for export of cotton were supposed to be registered with Textile Commission of India initially, which later on amended and registration was shifted to the Directorate General of Foreign Trade. The Customs department was directed to verify that the contracts have been registered prior to clearance of cotton consignments and shipment.
He said the Indian Directorate General of Foreign Trade allowed applications for export quota through email, opening up the door for many non-traditional exporters, including individuals, cotton testing laboratories, SMS service providers, companies engaged in solar energy solutions, chemicals and other agriculture commodities, to apply and get quota allocations.
Chairman APTMA said all these non-traditional quota holders are now offering the allocated quotas for 1.9 million bales to the traditional cotton traders at a premium or on a profit sharing basis. They are charging a premium anywhere in the range of 8 to 10 cents per lbs of the total value of export, he added.
Further, he said, hardly 38000 bales of cotton out of the pending low-priced contracts of one million cotton bales have been shipped to Pakistan so far. He said a new breed of non-traditional quota holders is now offering fresh deals to Pakistani importers in the price range of $1.40 - $1.70 per lbs out of 1.9 million cotton bales registered until January 10, 2011 for exports.
It is irony that the largest allocation is made to an Indian salt manufacturer, who had reportedly filed a shipment quota equivalent to the total cotton in India. The original cotton traders in India, after an engineered default, are now offering new contracts in the name of non-traditional traders to fleece Pakistani importers in a situation when devastating floods have already played havoc with cotton crop in Pakistan, he added.
Gohar said quotas are allocated to non-trade operators without any Letter of Credit or any contractual deal. Not only this, the shipment date of these bales has also been extended on the pretext of limited capacity on Indian ports.
Chairman APTMA termed the prevailing situation as a big scam, adding that the Indian policymakers were involved in 'doctoral default' by denying contracted deals of one million cotton bales with Pakistani importers.
He has urged the Indian government to resolve the issue through diplomatic channels and let the textile industry and agriculture of both sides benefit from each other in terms of proximity and comparative advantages in most testing period.
He said despite producing 32.5 million cotton bales this year, 10 percent upward growth comparing with last fiscal year, the Indian government has made amendments in notifications relating to cotton trade vide Notification No. 12(RE-2010)/2009-14 dated 16th December 2010 to distort the free market mechanism.
According to the amendment, the contracts for export of cotton were supposed to be registered with Textile Commission of India initially, which later on amended and registration was shifted to the Directorate General of Foreign Trade. The Customs department was directed to verify that the contracts have been registered prior to clearance of cotton consignments and shipment.
He said the Indian Directorate General of Foreign Trade allowed applications for export quota through email, opening up the door for many non-traditional exporters, including individuals, cotton testing laboratories, SMS service providers, companies engaged in solar energy solutions, chemicals and other agriculture commodities, to apply and get quota allocations.
Chairman APTMA said all these non-traditional quota holders are now offering the allocated quotas for 1.9 million bales to the traditional cotton traders at a premium or on a profit sharing basis. They are charging a premium anywhere in the range of 8 to 10 cents per lbs of the total value of export, he added.
Further, he said, hardly 38000 bales of cotton out of the pending low-priced contracts of one million cotton bales have been shipped to Pakistan so far. He said a new breed of non-traditional quota holders is now offering fresh deals to Pakistani importers in the price range of $1.40 - $1.70 per lbs out of 1.9 million cotton bales registered until January 10, 2011 for exports.
It is irony that the largest allocation is made to an Indian salt manufacturer, who had reportedly filed a shipment quota equivalent to the total cotton in India. The original cotton traders in India, after an engineered default, are now offering new contracts in the name of non-traditional traders to fleece Pakistani importers in a situation when devastating floods have already played havoc with cotton crop in Pakistan, he added.
Gohar said quotas are allocated to non-trade operators without any Letter of Credit or any contractual deal. Not only this, the shipment date of these bales has also been extended on the pretext of limited capacity on Indian ports.
Chairman APTMA termed the prevailing situation as a big scam, adding that the Indian policymakers were involved in 'doctoral default' by denying contracted deals of one million cotton bales with Pakistani importers.
He has urged the Indian government to resolve the issue through diplomatic channels and let the textile industry and agriculture of both sides benefit from each other in terms of proximity and comparative advantages in most testing period.
All Pakistan Textile Mills Association (APTMA)
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