India’s cotton yarn exports drop due to Pak-China’s Free Trade Agreement

• India's cotton yarn exports between April and September this year were recorded at 422mn kgs valued at $1.27bn.
• Under the new FTA, China would open up 90 pc of its market for Pakistani goods whereas Pakistan would share 65pc of its market with Chinese exports.

The Free Trade Agreement (FTA) between Pakistan and China has dented India’s cotton yarn exports after Indian cotton exports declined by a massive 38.8 percent during the first six months of the current fiscal year that ended in September 2019.

According to a report in Deccan Herald, cotton yarn exports between April and September this year were recorded at 422 million kgs, valued at $1.27 billion as compared to 654 million kgs valued at $2.08 billion recorded in the same period last year.

The report states that the FTA between China and Pakistan has been the major factor behind India’s cotton yarn decline, as India cotton yarn exports to China dropped after the second phase of China-Pakistan FTA came into effect. The FTA was signed in April on goods worth $64 billion that mostly pertained to textile products including cotton yarn.

K V Srinivasan, Chairman of the Cotton Textiles Export Promotion Council informed that there is an import duty ranging from 3.5pc to 5pc on cotton yarns imported from India into major markets like China, EU, Turkey and South Korea as against imports from competing countries like Pakistan that enjoys zero percent import duty in these markets.

Under the new FTA, China would open up 90 percent of its market for Pakistani goods whereas Pakistan would share 65pc of its market with Chinese exports.