(Repeats Friday's story)
* Pakistan a key market for Indian cotton exporters
* Tension between rivals puts traders off doing deals
* Some officials say business should resume in time
By Rajendra Jadhav and Syed Raza Hassan
MUMBAI/KARACHI, Oct 7 Rising hostilities between
India and Pakistan have brought their $822 million-a-year trade
in cotton to a juddering halt, as traders who are worried about
uncertainty over supplies and driven by patriotism hold off
signing new deals.
The nuclear-armed rivals have seen tensions ratchet up in
the past few months over the disputed territory of Kashmir, and
cotton traders in both countries said they were watching
developments along the de facto border with alarm.
Pakistan, the world's third-largest cotton consumer, usually
starts importing from September, but three Indian exporters said
the number of inquiries had slowed to a trickle in the last two
In the clearest sign yet of souring relations affecting
commerce, Pakistan-based importers also said they were not
"At the moment there is no cotton trade. It's at standstill.
There is uncertainty that, God forbid, if war breaks out, what
will happen?" said Ihsanul Haq, chairman of the Pakistan Cotton
Pakistan Cotton Commissioner Khalid Abdullah said a "low
quantum of trade activity is still taking place."
He said the Pakistan government had not directed traders to
stop buying Indian cotton and expected trade to normalize when
Indian government officials said they had not yet noticed
trading had stopped.
But some Indian officials said last week that Prime Minister
Narendra Modi's government was considering whether it should
choke trade with Pakistan to put pressure on its neighbour, even
though the trade balance is in India's favour.
INDIA'S BIGGEST COTTON BUYER
Trade between India and Pakistan, which have fought three
wars since their independence from British rule in 1947, is
In the 2015/16 fiscal year ending on March 31, official
trade between the two was $2.6 billion. Cotton is the largest
component of that total.
It is not clear whether other goods and commodities traded
between the two, such as jewellery and dry fruits, have been hit
by the escalation in hostilities as well, but the disruption to
cotton shipments is potentially significant.
In the crop year ended Sept. 30, Pakistan was India's
biggest cotton buyer after its own crop was hit by drought and
It imported 2.5 million bales from India, and supported
Indian cotton prices at a time when China was cutting imports,
Lower purchases by Pakistan this year could hurt exports
from the world's biggest producer of the fibre and put pressure
on Indian prices, but could also help rival cotton suppliers
like Brazil, the United States and some African countries.
Chirag Patel, chief executive officer of Indian exporter
Jaydeep Cotton Fibers, said the country could export 5 million
bales in the 2016/17 crop year, but exports could plunge to 3
million bales without Pakistani imports.
An exporter based in Mumbai estimated that Pakistan will
need to import at least 3 million bales in 2016/17, and India
will have a surplus of around 8 million bales.
"As soon as the (political) situation improves, cotton trade
will definitely resume between the two countries," said Haq of
the Pakistan Cotton Dealers Association.
But for now, traders on both sides of the border said the
environment was not conducive to doing business.
"Many cotton exporters are not interested in selling cotton
to Pakistan. They are trying to find other markets," said
Pradeep Jain, a ginner based in Jalgaon in the western state of
Shahzad Ali Khan, chairman of Pakistan Cotton Ginners
Association, referred to a move by the Indian Motion Picture
Producers' Association (IMPPA), a small filmmakers' body, last
month, banning their members from hiring Pakistani actors.
"India is banning Pakistani artists, so how can it expect us
to buy cotton from India?" Khan said.
"In various forums Pakistani traders are saying they will
not buy cotton from India this year. Even if they need to pay
extra, they will pay and buy it from other suppliers."
(Editing by Paritosh Bansal and Mike Collett-White)