Pakistan plans import of cotton from Uzbekistan


ISLAMABAD: After losing hope of getting a green signal from the Indian government on committed cotton import, textile manufacturers have approached the government to negotiate a special deal with Uzbekistan for import of one million cotton bales for abridging the expected shortage of the raw material for local industry in the last three months of the current fiscal year.

A senior official in the commerce ministry told Dawn on Friday that the ministry has taken up the issue with Uzbekistan’s government through the Pakistani high commissioner in a bid to seek special waiver from Tashkent’s parliament on relaxing business procedures for import of cotton.

All Pakistan Textile Mills Association chairman Gohar Ejaz confirmed to Dawn that negotiations are underway and stressed that the deal was very important because the local industry especially the spinning sector would face a shortage of cotton in the months from April to June.

As per Uzbekistan business procedure, an importer will have to pay 80 per cent of the bill as cash payment in advance leaving the remaining 20 per cent for letter of credit (LC) terms. “This is the biggest hurdle in finalising the deal with the Uzbek government”, Ejaz said.

He said that the government is working hard along with the industry to seek special waiver from the Uzbekistan’s government to convert the deal into LCs term instead of cash, which will be in compliance with the Pakistani business procedure.

According to the commerce ministry official the issue has been taken up at the highest level as well. “We expect some leniency from the Uzbek government to facilitate the trade of cotton with Pakistan”, the official added.

The Uzbek government has agreed in principle to allow export of one million bales of cotton to Pakistan during the recent visit of Prime Minister Yousuf Raza Gilani to Tashkent. Gohar Ejaz said the industry along with the government was just contemplating the modalities of cotton import including transportation and mode of payment to the Uzbek exporters.

However, he said that cotton import from Uzbekistan will be costly as compared to cotton from India. He said that the Indian exporters’ suspensions of export orders of cotton to Pakistan will cause more than $500 million extra cost to the local industry. He said the cotton price has almost doubled in the international market now as compared to the month of November last year.