Pakistan's textile industry is holding talks with its Indian counterpart to form a cartel of their own. The countries plan to come up with fixed, common prices for their home textiles exports.
Apparently, the Pakistani and Indian textile industry, especially home textiles, lose out on better prices due to competition from each other.
"Western buyers, especially from the US and Europe, squeeze our margins by quoting us competitive prices being offered from India and vice versa. In an attempt to retain our customers, we end up offering lower prices and eventually incur losses. By forming a cartel with home textiles industry players from India, we will be able to decide an optimum limit for prices below which none of us will offer our products to these buyers henceforth," said Azhar Sheikh, chairman of Arzoo Textiles, one of the leading home textiles company from Pakistan, during his visit to Ahmedabad.
Sheikh, who is also the chairman of Federation of Pakistan Chamber of Commerce and Industry (FPCCI), a counterpart of FICCI, added that the company has had initial talks with Ahmedabad-based Jindal Worldwide Ltd.
"Home textile companies from Pakistan are eager to form a cartel with us in order to boost our bargaining power against the Western buyers. We intend to take the discussion forward with other major textile players in India," said Yamunadutt Agrawal, chairman of Jindal Worldwide.
While currently, most of the companies perform under squeezed margins or at times face losses, they expect 10-12 per cent better prices through the Indo-Pak cartel.
"Both India and Pakistan are one of the major home textiles exporters. Yet, many of our companies are selling either at cost or at a loss. If we decide on a fixed level of prices, we hope to improve our situations," said Sheikh.
Once successful, the cartel would be replicated in other verticals or value chain of textiles.
"We have invited Indian companies like Jindal Worldwide, Welspun and Alok Industries for talks. Later, we intend to take the proposal to our respective governments as well," he added.
Pakistan, which produces 800 million sheet sets per annum, exports around $ 4-5 billion of home textiles. Major companies like Arzoo Textiles, Nishad Mills Ltd., Chenab Ltd., Crescent Textiles Ltd., and Liberty Mills constitute close to 90 per cent of its total home textiles exports from Pakistan.
