LAHORE: Pakistani textile sector will be the leading beneficiary of trade normalization between India and Pakistan if any major breakthrough takes place.
Cross border trade with India holds important implications for Pakistani economy especially for textile sector, experts have said.
According to reports, India has recently accepted Pakistan’s stance of removing its textile products from prohibitive list. Furthermore, struggle is under way from both sides to announce Non-Discriminatory Market Access on reciprocal basis for each other.
The status will grant India the same benefits as imagined under MFN status. Besides these steps will contribute to positively enhance textile exports to India and will fortify the textile sector’s profitability.
“Pakistani textile exports will witness a boost of $1 billion per annum as a result of successful provision of the status by the neighbouring country” they added.
A slowdown in yarn demand from China created an inventory pileup both in India and Pakistan. It’s very hard for India to dump Pakistani market of 30 count yarns due to unfavourable price differential of $ 3.28/kg in Pakistan and $3.58/kg in India, the experts indicated.
Nevertheless, India has a competitive advantage in blended yarn due to economies of scale and zero rating on the commodity import in Pakistan. India is already taking benefit from this anomaly and this will further dump the local market if import duty is not imposed on blended yarn, they warned.
A recent Pakistani rupee appreciation of 11 per cent from its lowest level against US dollar was a serious concern for textile exporters as the exports business is hit hard from the rupee strengthening. If the PKR starts depreciating again to remain in range bound from 102 to 104 per USD in remaining part of 2014 it shall provide support to exporters, they concluded.