Pakistan plans to import cotton from Uzbekistan
Textile manufacturers in Pakistan have approached the government to negotiate a special deal with Uzbekistan for the import of of one million cotton bales for abridging the expected shortage of the raw material for thelocal industry in the last three months of the current fiscal year.
A senior official in the commerce ministry said 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.
Pakistan Textile Mills Association chairman, Gohar Ejaz, said that negotiations were underway and stressed that the deal was very important because the local industry 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% of the bill as cash payment in advance leaving the remaining 20% for letter of credit (LC) terms. “This is the biggest hurdle in finalising the deal with the Uzbek government”, Mr 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.
The Uzbek government has agreed in principle to allow the 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 logistics 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.
