Begin with trade
Relations between India and Pakistan are an all time low since the past many years now. However, some hope was generated last week when both the countries displayed large heartedness and expressed willingness to come together to resolve issues and start negotiations.
To begin with both the nations chose the all important Line of Control (LoC) that has witnessed ceasefire violations like never before. Since the LoC is witnessed some calm from the past three days the two nations it seems have started to come a bit more closer as resumption of trade is being worked on.
To begin with Pakistan may allow cotton import from India through land route as prospects of gradual restoration of bilateral trade ties have brightened after the new ceasefire agreement.
Pakistan is currently witnessing a shortfall in cotton production owing to many reasons. One being the Covid lockdown due to which many cultivators could not harvest the crop on time no could they devote enough time to enhance production.
Since the issue of cotton shortfall has already been brought to the notice of Prime Minister Imran Khan, who also holds the portfolio of the commerce minister, his key team is working closely with the Economic Coordination Committee of the Cabinet to issue formal orders.
Pakistan’s challenge is that against the annual estimated consumption of minimum 12 million bales, the Ministry of National Food Security and Research expects only 7.7 million bales production this year. However, cotton ginners have given the lowest production estimates of only 5.5 million bales for this year.
There is a minimum shortfall of six million bales and Pakistan has so far imported roughly 688,305 metric tonnes of cotton and yarn, costing USD 1.1 billion. There is still a gap of about 3.5 million bales that needs to be filled through imports.
Due to shortage of cotton and yarn, the users were compelled to import them from the United States, Brazil and Uzbekistan. However, imports from India would be far cheaper and would reach Pakistan within three to four days.
Importing yarn from other countries was not only expensive but would also take one to two months to reach Pakistan. The delay in yarn import can pose risk to timely deliver the export orders which can further delay the receipt of payments as well.
Interestingly, beginning with a soft commodity import from India can further open many other avenues like other products and commodities which the two countries were dealing in before the total trade cessation following the February 2019 Pulwma attack and the Balakote strikes.
Ironically, the bilateral ties deteriorated further after India revoked the special status of Jammu and Kashmir in 2019. The move angered Pakistan, which downgraded diplomatic ties and expelled the Indian High Commissioner in Islamabad. Pakistan also snapped all air and land links with India and suspended trade and railway services.
