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India uses century-old law to harm Pakistan

DR ZAFAR HASSAN

LAHORE: Reacting to the Indian ban on raw cotton imports from Pakistan cotton traders on Friday said that the Indian government has retrieved a century-old legislation, vis the Destructive Insects and Pests Act 1914, to amend the Import of Cotton into India Regulations 1972 in a selective and malafide manner to target Pakistan in a political bid to malign Pakistan and harm its economy.

Leading cotton merchant and a former chairman of the KCA, Nadirshaw Kabraji, called the Indian government ban on Pakistani cotton imports a deplorable act. Kabraji added that the Indian government move is a political decision, which has no relationship with economics. In any case, Kabraji stated that same viral conditions are prevailing in the Indian part of Punjab. He regretted that the initiative to bring traders between the two countries closer has received a set-back with this Indian decision.

Cotton circles in Karachi were of the opinion that the move by the Indian government to ban cotton imports from Pakistan is motivated to redress the sagging popularity of the BJP government.

There were news in the trade circles that some Indian importers of cotton would challenge the government ban on Pakistani cotton in the courts and also try to obtain a stay order against the government notification. A section of the cotton trade considered the Indian government move to ban cotton from Pakistan as a first volley towards an initiation of a trade war between the two countries, which also negates the spirit and substance of free trade and globalisation process of the economies around the world.

In the mean time, lint prices in Pakistan have shot up Rs 250 to Rs 300 per maund (37.32 kgs) since the seasonal low levels recorded last month. In fact, this week lint prices increased by Rs 100 to Rs 75 per maund in Sindh and Punjab. The cotton prices have rebounded to gain strength with a tendency on the firmer side. The textile mills have already bought large quantities of cotton totaling nearly 6.6 million bales, while the Trading Corporation of Pakistan (TCP) has also reportedly received about 600,000 bales (170 kgs) of current crop (1999-2000) in its godowns.

With a crop now generally estimated around 10 million bales, hardly 300,000 to 400,000 bales of cotton will remain as an exportable surplus. The domestic mills are projected to consume more than nine million bales and several mills are buying for use well beyond this season, reportedly stretching to October or November 2000.

If the domestic prices keep their upward trend, no more cotton is likely to be tendered to the TCP by the Pakistani growers, so that the TCP may end up acquiring only about 600,000 bales (170 kgs), which is already estimated to be in its warehouses. Later on, some of the local mills that have not covered adequate cotton for the season may have to pay higher prices. According to international merchants, their asking prices for CIS and other origins for the upland cottons has been increased by three US cents per pound.

The KCA spot rates were increased across the board in all the notified varieties on Friday. Thus the spot rate for Niab-78 was fixed at Rs 1,333.75 per maund, that for K-68 was determined at Rs 1,650 per maund, while the spot rate for MNH-93 was determined at Rs 1,683 per maund. The outlook for ready cotton prices remained steady to strong.

About 18,000 to 20,000 bales of cotton were reportedly transacted on Friday, while on last Thursday nearly 20,000 bales were sold in the ready market. While many of the smaller growers may have missed out on the sizeable increase in seedcotton (kapas/phutti) prices recently, several of the larger growers will benefit from this price escalation. Seedcotton prices in Sindh made impressive gains to range from Rs 500 to Rs 650 per 40 kgs, while in Punjab also the seedcotton prices registered an increase to range from Rs 500 to Rs 675 per 40 kgs. The condition of the seedcotton market remained steady to firm. Scarcity of arrivals of seedcotton into the ginning factories are possibly due to fog and rains in most of the cotton belt. The growers still carrying seedcotton stocks are releasing them sparingly.

The price idea of lint on Friday in Mirpurkhas in Sindh was Rs 1,100 per maund (37.32 kgs) without the 15 percent sales tax; 200 bales from Shahpur Chakar and 1,000 bales from Shahdadpur sold at Rs 1,200 per maund; 500 bales from Nawabshah sold at Rs 1,250 per maund; 2,000 bales from Nawabshah also sold at Rs 1,350 per maund on two-month's credit. The price idea for cotton from Khairpur district was stated to be Rs 1,350 per maund; 3,500 bales from Daharki, Mirpur Mathelo and Ghotki sold at Rs 1,450 to Rs 1,475 per maund, while another 3,000 bales from upper Sindh (K-68) reportedly sold at Rs 1,510 to Rs 1,525 per maund on two-month's credit basis.

Without the sales tax, 200 bales of cotton from Muridwalla in Punjab sold at Rs 1,300 per maund; 500 bales from Rajanpur and 2,500 bales from Khanpur both sold at Rs 1,450 per maund (37.32 kgs), while 1000 bales from Rahimyar Khan and 1,500 bales from Sadiqabad are said to have been sold between Rs 1,450 to Rs 1,475 per maund.

Federal Agriculture Minister Dr Shafqat Ali Jamote announced in a meeting of the Farmers Associates Pakistan (FAP) that the government will announce the next cotton policy by March this year, two months in advance of the sowing of the 2000-2001 cotton crop. This was stated by the Chief Executive of FAP, Malik Afaq Tiwana, after the 72nd extra-ordinary general meeting of the organisation on last Thursday.