How trading cotton across the border can be a win-win situation for India and Pakistan
By Ira Puranik, Mahpara Kabir, Mohammad Malik, Priyashi Negi, Shaheen Abdulla
Sitting in his humble home in the quaint village of Kothe Chand Singh Wale in the outskirts of Bhatinda, in Indian Punjab, Avtar Singh is a picture of sorrow. Between him and his brother, Jasprit Singh — both wanting to abandon farming the produce — it is not hard to fathom why they wish to cut ties with the cotton farming.
“Last year, we only had produced 15-16 maund (500-600 kgs). We have been suffering losses from the last six years. Many of us are planning on leaving cotton farming altogether, “ laments Avtar Singh.
As bleak as his hopes are from his produce, he believes there is a ray of hope if the fruits of his labour travel across the international border of India and Pakistan. While Avtar Singh’s cotton does not fetch him a good deal in India, he can certainly earn more if his cotton travels across the border. Across the border, it can benefit an ailing textile industry that is in need of better, consistent cotton supply.
How cotton fares on either side of the border
Some 900 kilometers away from Bhatinda, Ali Pervez is looking for good quality and consistent supply of cotton for his textile mill in Karachi. Owner of Unibro Textiles, one of the largest textile industries in Pakistan, he has more than 1,000 employees on roll. “People can talk about nationalism, but we have to pay salaries to 1000 workers. The cotton we import from India is better in quality and cheaper as well,” he says. Pervez is just one of the many textile mill owners who rely on imported cotton to breathe life into the gradually declining domestic textile industry.
The textiles industry is an extremely important contributor to the Pakistan’s Gross Domestic Product (GDP), which has been plagued by a shortage of domestic cotton for long. More than 100 Textile factories, mostly medium and small scale enterprises, were shut down in Pakistan affecting 500,000 jobs in 2015-16. According to the Economic Survey of Pakistan, the textile exports for FY 2016-17 showed a negative trend, with direct revenue loss of about $ 3,602 million. Given the grim conditions, the Pakistan government allowed the duty-free import of cotton for five months in January 2019.
Yousam Khan, currently a merchandise supervisor, poignantly puts in light the diminished capacity of the textile industry, which has lost 30-35% of its production capacity in recent years.
“In earlier days we couldn’t find enough people to take on jobs in the textile industry. Today, people are standing in queues and yet, there are no jobs. There is a lot that needs to be done for our betterment. “
As a fabric that binds the two nations, both of which cut from the same cloth, it is perhaps unsurprising that cotton is one of the essential commodities that needs to be traded.
Surjeet Singh, who has been farming cotton in Indian Punjab for decades, says that it is the high cost of acquiring inputs like fertilizers and good quality seeds that push them into great debt. And given the low yield and the consequently low prices they receive, they are left with no choice but to commit suicide. His words ring true in the light of a survey conducted by three universities of Punjab, which reveal that on an average, around 1,000 farmers have committed suicide every year in the state since 2003.
All that is needed to give these farmers a new lease of life are good prices for their produce. Pakistan imported raw cotton worth $203.25 million from India in 2017, apart from importing other cotton commodities such as yarn, woven cotton fabrics etc. In stark contrast, an Indian farmer in Punjab received less than INR 4,500/ quintal for his produce. The potential for this price to go up is immense, given Pakistan’s increasing imports.
Experts agree that the festering conditions of farmers in India’s Punjab could be solved if the state let them sell their products across the border. Given how both nations rely greatly on exporting cotton, Indian farmers expressed that the transit to Lahore could revive cotton farming.
“Exporting cotton ( to Pakistan) could fetch more revenue to us due to reduced transportation costs. Textile mills in Pakistan could be a better market for us than say, Mumbai”, says Avtar Singh. His beliefs are not unfounded. Mr. Fareed, a senior Pakistani Economist, says, “You can have differences, but it is impossible to survive if your neighbors are your enemies.”
And why not? After all, in times of distress, it is often the neighbors whose help is sought before that of one’s far-flung kin.
Bringing the neighbors together
Even after the recent skirmishes between the two neighbors, be it India stripping Pakistan of its Most Favoured Nation trade status or the 200% import duty hike, cotton traders on both sides were optimistic of cotton trade remaining unaffected. “India is the most accessible and price-lucrative cotton market for Pakistan,” Atul Ganatra, president of the Cotton Association of India, told Economic Times, a leading newspaper on the same.
Farmers and mill owners aside, yet another crucial link in the trade are labourers and porters who have also been left without any means of sustenance due to the present halt of trade at the Wagah Attari border.
“When they came to receive Abhinandan (Indian Air Force pilot), we thought it will bring us a fortune, But instead, it halted the trade,” complaints Ram Singh, one amongst the ten thousand laborers whose livelihood depend on Indo-Pak trade. Many hope that normal trade will resume post elections in India.
Temporary halts aplenty, trade has never been permanently discontinued between the nations. Sure, a disturbed political sphere has spelled unease for smooth trade to ensue between the two countries in the past. But both the countries have, more or less, made up for it by valiantly pushing forth trade dialogues to make way from dire bilateral situations.
Trade between the two nations had reached an absolute standstill post the 1965 Indo-Pakistan war. Dialogue resumed nine years later, in 1974, with trade taking place in a limited number of commodities. What is noteworthy is that this ‘positive list’ kept increasing with time, commensurate their needs. Even in 2011-12, regarded by many experts as the ‘warmest period in the trade history of India-Pakistan’, the gradual phasing out of items from the negative or banned list to the positive register of commodities indicated the bilateral economic will to harness the prospects of trade growth.
India is estimated to export around 9,36,000 million tonnes of cotton in FY 2018-19. Pakistan imported cotton worth $1.2 billion in 2018, gaining its place as the 8th largest cotton importer in the world. Despite being a hefty producer, Pakistan’s reliance on imported cotton has been growing steadily. And for India, Pakistan remains a strong, if potential, trading partner.
What it was, what will it be?
“Trade is essential between the two,” says Dr. Nisha Taneja, one of the leading experts on India-Pakistan trade and a professor with the Indian Council for Research on International Economic Relations. In her words, there is a lot of untapped trade potential between these neighbors. More so, some products, she feels, seem so exclusively present for each other, that trade feels necessary and reasonable.
Taneja’s words are substantiated by the World Bank report, “ A glass half filled; Promise of regional trade in South Asia”. Released in September 2018, the report estimated that trade between India and Pakistan can potentially reach up to $37 billion from the current trade of $2.4 billion.
“It is always the people who are at the losing end,” said Sanjay Kathuria, author of the report and lead economist with the World Bank. But given the immense trade potential between the countries, there is no reason why people on both sides should have to suffer.
Seventy years back, both these nations were torn apart by partition that ravaged countless lives. Cotton can be a commodity that can bind the subcontinent and bring people closer, one bale, one yarn at a time.