A Kashmiri labourer arranges sacks containing sugar inside a government warehouse in Srinagar (Representational image)
The Pakistan government on March 31 announced the relaxation of import restrictions on India. It will now import cotton till June-end, and up to 500,000 tonnes of sugar.
The decision was announced by the country's Finance Minister Hammad Azhar, following a crucial Cabinet committee meeting convened earlier in the day.
Pakistan's Economic Coordination Council has allowed the private sector to import 500,000 (0.5 million) tonnes of sugar from the neighbouring country, he said.
"Our estimate is that sugar is 15-20 percent cheaper in India as compared to Pakistan. Our decision to allow the imports will benefit the poor," Azhar claimed.
The decision on cotton imports would also benefit the country's small and medium-sized enterprises (SMEs), the finance minister said. The SMEs cannot afford to pay the higher amount which larger firms pay for cotton imported from Egypt and other countries, he added.
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Pakistani buyers have already started making enquiries about buying Indian sugar and cotton, which is being offered at lower prices than supplies from other countries, five dealers said while speaking to news agency Reuters.
Notably, India is the world's biggest producer of cotton and the second biggest sugar producer. The resumption of exports to Pakistan will help in reducing the surplus from the local markets while helping Pakistan to bring down the soaring sugar prices ahead of Ramadan.
India is offering sugar at a discount compared to supplies from Thailand, said a dealer with a global trading firm. "Pakistani traders have been buying Indian sugar through their offices in Dubai for Afghanistan. If Pakistan allows imports from India, they will unload shipments in Pakistan," the dealer said.
Traders say they have been offering Indian white sugar at $410 to $420 a tonne on a free-on-board (FOB) basis, far lower than the domestic price of $694 quoted in Pakistan. Indian exporters could also ship via sea or land, the dealer said, noting this gives them a big edge given tight global container shipping markets.
Pakistan was one of the leading buyers of Indian cotton until 2019 when Islamabad banned imports of goods from India after New Delhi revoked the special status of Jammu & Kashmir.
The partial resumption of India-Pakistan trade comes days after the militaries of both countries reaffirmed their commitment to the agreement of ceasefire along the Line of Control (LoC).
Earlier in March, Pakistan Army chief General Qamar Javed Bajwa and Prime Minister Imran Khan said they were open to dialogue with India to find a "lasting peace" and resolution for all pending disputes.
This was followed by a letter written by Indian PM Narendra Modi greeting his Pakistani counterpart and the general public of the neighbouring nation on the Pakistan Day, observed on March 23. Khan, on March 30, wrote back to Modi expressing his country's desire for dialogue if an "enabling environment" is created.(With Reuters inputs)