India’s withdrawal of Most Favored Nation to Pakistan and the 200 per cent hike on imported goods has put an end to import of cement from Pakistan. But ginned cotton and cotton yarn exports to Pakistan may remain impervious to the current turmoil. A shortage in domestic output and the favorable cotton market provided by India will keep Pakistan a key buyer of Indian cotton.

Pakistan’s cotton industry requires raw material from India. India is the most accessible and price-lucrative market for Pakistan. Pakistan is expected to import around a million bales of cotton from India in the current financial year. The possibility of a reciprocal hike in duty by Pakistan on the purchase of cotton from India is ruled out. Pakistan faces a shortage in domestic output of the natural fiber and the growth of its textile industry will be hampered.

Cotton exports to Pakistan are expected to continue even in the event of an increase in duty as the consignments would be routed via ports in Dubai and Singapore. Cotton purchases by Pakistan have grown in recent years due to the growth of the local textile industry and the price advantage due to proximity with India.