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 a key market for Indian cotton exporters
Some officials say business should resume in time
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 weeks. In the clearest sign yet of souring relations affecting commerce, Pakistan-based importers also said they were not buying.
"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 Dealers Association. 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 normalise when tensions eased.
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. Trade between India and Pakistan, which have fought three wars since their independence from British rule in 1947, is small.
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.
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