Indian traders refuse to ship cotton for the fifth time

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KARACHI: Indian traders have, for the fifth time in the current season, backed out of their commitment to export cotton to Pakistan and demanded renegotiation of prices, importers said on Saturday.
“India is once again inviting us to negotiate prices,” said M Yasin Siddik, chairman of All Pakistan Textile Mills Association, Sindh-Balochistan Region.
The export deals were made in October 2010 and have been cancelled five times. “The Indians annulled deals every time to get higher prices, keeping in view surging prices in the world markets,” Siddik said.
March and May future contracts at International Commodity Exchange, New York, rose to record highs of $1.69 per pound and $1.63, respectively, on Friday evening.
During the last five months, Pakistan has placed orders for about one million bales at rates ranging from $0.71 per pound to $1.52, but Indian sellers have so far delivered only 67,000 bales.
Shakeel Ahmed, a leading cotton trader, said India exported 67,000 bales out of around 300,000 bales booked in November at rates between $1.45 per pound and $1.52. “And India exported these bales in December at a time when the price in international markets was 20 cents lower than the agreed price.”
The Pakistani importers opt for Indian cotton because it takes only one day to reach Pakistan compared with 44 days in case Pakistan imports cotton from US, Brazil or Argentina.
Siddik said that the Indian cotton still remained cheaper as its quality was lower than that of US, Brazil and other countries. “Above all, its quality suits Pakistani textile products.”
Dr M Ali Talpur, Director Research at Ministry of Food and Agriculture, said that if exporters failed to deliver on time, importers have a right under the law provided in Letter of Credit (LC) to go into arbitration and sue them in England. But majority of Pakistani importers avoid this way to resolve the issue, saying that the process involves wastage of time.
Some importers from Pakistan, China and US have, however, gone for arbitration in their disputes with Indian exporters, he added.
DK Nair, Director General of Confederation of Indian Textile Industry (CITI), told The News on phone that India would honour all cotton export deals. “The commodity price has jumped to an all-time high of 50,000 Indian rupees for 256 kilogram with an abrupt increase of three thousand rupees in a single day on Friday and our value-added textile industry is crying for the commodity, but India will deliver all export orders. We will not sign new deals in the current season.”
He said that if an unscrupulous exporter was not shipping cotton at the agreed rate, the importing party should go for arbitration, he said.
When told that India had asked its exporters to get registered with Directorate General of Foreign Trade prior to shipment, which was a non-tariff barrier in the eyes of Pakistani importers, he said it was not a new condition.
He said India would deliver cotton to all its worldwide buyers including those in Pakistan despite the fact that it was facing severe shortage of raw cotton. India allocated 5.5 million bales quota for export of cotton in the last quarter of 2010.

(Source: http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=28375&Cat=3)

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