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Gul Ahmed set to make inroads into Indian market

January 22, 2013

Fabric maker hopes for a sharp cut in Indian import duties.

By Farhan Zaheer

“Any delay in MFN is tantamount to stopping Pakistan’s exports to India as Indian products are continuously making their way to Pakistan,” says Ziad Bashir.

KARACHI

At a time when the movement towards trade liberalisation between India and Pakistan seems to have hit a speed bump there is no dearth of companies which have made up their minds and are prepared to make inroads into the Indian market.

One such company is Gul Ahmed, the manufacturers of some of the finest fabrics in the country, which believes that the MFN status to India will equally serve Pakistan’s interest.

“Any delay in MFN is tantamount to stopping Pakistan’s exports to India as Indian products are continuously making their way to Pakistan,” Ziad Bashir, Director of Gul Ahmed Textile Mills.

Fresh from a recent trip to India and Bangladesh, Bashir said the balance of trade between the two neighbours, which is heavily tilted in favour of India, can only be controlled by rationalising duties in India and for that MFN issue needs to be settled.

Indian cotton, yarn and various types of chemicals are coming to Pakistan while Pakistan is not exporting anything significant. “Unless you give MFN status and India brings down heavy duties on textile products from 38% to around 5%, we will not be able to export our products,” he pointed out.

Though the volume of trade between the two countries is growing, Pakistan is not making any remarkable gains. In 2006-07, Pakistan exported goods worth $342.9 million to India compared to imports of $1.24 billion. Unfortunately, Pakistan’s exports dropped to $264.3 million in 2010-11 and imports surged to $1.74 billion.

Current bilateral trade is said to be around $2.5 billion, in which Pakistan’s exports are not more than $300 million.

Potential does exist for giving a boost to exports as Pakistan’s cotton fabric, especially lawns, is highly popular in India. “You just have to take few branded lawn suits with you and you can recover your travel expense,” said Bashir in a lighter vein. “Once we give the MFN status, I hope we can balance our trade in two to three years.”

Bashir also links the MFN issue with regional trade. “It is not a matter of just MFN. Pakistan’s economy is growing slowly because of security and energy issues and it desperately needs a strong push to keep up with growing regional economies of India and China.”

Gul Ahmed heavily focuses on exports as it ships overseas some 70% of its production every year. Yet the company feels that it has lot to gain in the domestic market.

First, the fabric manufacturer wants to tap the whole of Pakistan and in this effort it is opening 10 stores every year in different cities, Bashir said, when asked about the need for launching stores in the UAE and India where Pakistani lawns are very much popular.

However, Gul Ahmed is not running its operations without challenges. It posted a loss after tax of Rs240 million in 2012 against a profit of Rs1.19 billion a year ago as a host of factors affected its performance.

According to Bashir, the company faced many challenges last year like slowdown in export markets, ups and downs in world cotton prices, energy and security issues. He expressed the hope that the company will make a strong comeback this year.

In response to a question about strong demand of Pakistani lawn in India and Bangladesh, he said, “we have done extensive research on our products, which no one can easily copy. It is a difficult and complex manufacturing process, which requires hefty investment and we know not many people can do this.”

Even in the domestic market, he said, dozens of new designers emerge every year, but they usually leave the market after a brief period, unable to cope with competition in a difficult field.

Published in The Express Tribune, January 22nd, 2013.

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From → By Farhan Zaheer

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