Pakistan-India trade - Textile industry sees competition with India

The actual potential of trade between Pakistan-India is estimated around $10 billion to $15 billion, according to a study conducted by the Karachi Chamber of Commerce and Industry (KCCI). This potential should be fully explored and expanded by adopting common approaches and joint strategies. Indian High Commissioner Shivshankar Menon in Pakistan also said the other day that trade volume between India and Pakistan would increase to $ 6 billion within a year, provided the prevailing tempo of friendship is sustained.
In an era of globalization, which contemplates liberalization of trade, the maxim of 'survival of the fittest' would be the touchstone of trade promotion. As such the days of captive markets will no more return. There is going to be more scope of doing trade in textile products world-wide. Pakistan is well placed in certain categories of textiles.
As the textile is the largest industrial sector in Pakistan it will have a major role to play within the framework of SAFTA with other contracting states. The main players in the textile sector of the region are going to be Pakistan, India and Bangladesh.
Pakistan's textile industry under SAFTA could benefit from trade rationalization and flow of raw materials. Pakistan can export with advantage to vast SAFTA market, products such as cotton yarn, textile fabrics and other products to meet regional shortfalls. The most serious factor would be that in case cotton crop fails in one part of the region it could have a snowball effect on the prices of other SAARC member states.
The most encouraging aspect of the situation is that the tariff structure of Pakistan had already been rationalized and is presently lower than the competitive countries of the region. Therefore, it would not be that difficult for Pakistan's business and industry to compete with the products of other SAARC member states.
Despite the fact that Pakistan will be having an advantage of local raw material i.e. cotton, it will still have to do a lot more to improve its quality, which will have direct implications on the final product. From among seven members of SAARC only two - Pakistan and India - are cotton producers and will be enjoying an edge of local raw material over other countries of the region. However, it is equally encouraging that cotton yield per acre in Pakistan is more than in India and with little more efforts on the part of growers and the government control over the supply of spurious fertilizers and pesticides could mean a lot for a higher production per acre.
Furthermore, raw cotton trade is free in Pakistan and all sort of subsidies are no more on this major crop of the country. There is no restriction on import or export of cotton. Against this, India has yet to move on this direction as state involvement is still there. Above all India has yet to lift subsidies on agriculture products.
The basic textile industry, that is, spinning and weaving in Pakistan is most competitive in the region and has an edge over the industry of other SAARC member states. But Pakistan needs to do a lot more in the value-added textile sector.
The Indian High Commissioner in Pakistan has rightly pointed out that both South Asian neighbours, Pakistan and India, have the potential to closely co-operate in the textile sector as Pakistan produces long-fibre cotton that can be spun and woven in India and sent back to Pakistan for stitching. At present the Indian economy is the world's fourth largest economy on the basis of purchasing power with its external resources exceeding $100 billion.
In less than nine months from now the textile quotas inherited from the multifibre arrangement will disappear, ending more than 30 years of trade restrictions in the world trade of textiles and clothing.
It will be a big challenge for Pakistan and its textile industry. How far will our textile industry rise to the occasion to face this challenge posed by the globalisation of the textile trade without restrictions and protective measures is any body's guess.