As the threat of military conflict between India and Pakistan escalates in a dispute over the Kashmir region, business leaders have expressed their concern that the crisis could affect crucial apparel orders from the US and EU.

Pervez Hanif, former president of the Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA), said: "Foreign buyers are reluctant to visit us because of the situation in Kashmir, and on the Indo-Pak borders."

And Shahzad Azam Khan, chairman of the Pakistan Hosiery Manufacturers Association, said exports are being affected by the border conflict. "Who would like to buy from Pakistan in these circumstances when they can go to other places for the same?," he told Dawn newspaper. "We do not produce something special that is not available in other parts of the world."

According to exporters in Pakistan, the spring 2003 season could be affected if buyers delay placing their orders while the danger of war hangs over the region.

Knitwear and woven garment exports from Pakistan were hit badly in the aftermath of the September 11 attacks when foreign flight cancellations, the imposition of a war risk surcharge and fears over delivery deadlines forced buyers to source elsewhere.

Around 80 per cent of this lost business returned, however, helped by low inventory levels in the US and concessions from the EU.