APTMA vexed by ‘default’ of Indian cotton exporters


LAHORE – All Pakistan Textile Mills Association (APTMA) Chairman Gohar Ejaz has complained of the ‘engineered default’ on the part of Indian cotton traders working hand in glove with government policymakers, meddling in the cotton trade and repeatedly delaying shipments of contracted cotton deals to Pakistan.
He said despite producing 32.5 million cotton bales this year, a growth of 10 percent comparing with the previous fiscal year, the Indian government has made amendments in notifications relating to cotton trade vide Notification No 12(RE-2010)/2009-14 dated December 16, 2010 and disrupted the mechanism of the free market.
According to the amendment, the contracts for cotton exports were supposed to be registered with Textile Commission of India initially, which later on amended and registration was shifted to the Directorate General of Foreign Trade. The Customs Department was directed to verify that the contracts have been registered prior to clearance of cotton consignments and shipment.
He said the Indian Directorate General of Foreign Trade allowed applications for export quota through email, opening the door for many non-traditional exporters, including individuals, cotton testing laboratories, SMS service providers, companies engaged in solar energy solutions, chemicals and other agriculture commodities to apply and receive quota allocations.
APTMA Chairman has stressed that all these uncustomary quota holders are now offering the allocated quotas for 1.9 million bales to the traditional cotton traders at a premium or on a profit sharing basis. They are charging a premium anywhere between the range of eight to 10 cents per pound on the total value of exports, he added.
Furthermore, he said, hardly 38,000 bales of cotton out of the pending low-priced contracts of one million cotton bales have been shipped to Pakistan so far. He said a new breed of quota holders is now offering fresh deals to Pakistani importers in the price range of $1.40 – $1.70 per pound out of 1.9 million cotton bales registered until January 10, 2011 for exports.
The irony that the largest allocation is made to an Indian salt manufacturer, who had reportedly filed a shipment quota equivalent to the total cotton in India is not lost, APTMA noted. The original cotton traders in India, after an engineered default, are now offering new contracts in the name of non-traditional traders to fleece Pakistani importers in a situation where devastating floods have already wreaked havoc with cotton crops in Pakistan, he added.
Gohar said quotas are allocated to non-trade operators without any accompanying Letter of Credit or contractual deal. Not only this, the shipment date of these bales has also been extended on the pretext of limited capacity of Indian ports.
APTMA Chairman termed the prevailing situation a big scam, adding that the Indian policymakers were involved in ‘doctored default’ by denying contracted deals of one million cotton bales with Pakistani importers.
He has urged the Indian government to resolve the issue through diplomatic channels and let the textile industry and agriculture of both sides benefit from each other on the basis of proximity and comparative advantage in the most testing time.