Export of cotton fabrics from Pakistan decreased from US $2.11 billion in 2005-06 to US $ 1.80 billion in 2009-10, thus showing decline of 15%.

Pakistan has lost competitive edge in international textile and clothing export market on account of high business costs and low labour productivity. Bangladesh, Sri Lanka, and Vietnam continue to enjoy GSP concession, which further hurts Pakistan’s exports. Free Trade Agreements (FTA) between the US and Pakistan’s competitors in clothing exports and admission of 10 East European countries in the EU, may also affect Pakistan’s gains in exports. Manufacturing cost of various products like cost of yarn, grey fabric, processed fabric, terry-fabric etc, and Pakistan’s competitiveness was comparable to other global players in the sectors.

Textile sector is in deep crisis for the last many years. Weaving sector was making isolated efforts, which failed to achieve the required results. The problems i.e. energy crisis, non-availability of gas, deteriorating law and order situation and high interest rates has virtually crippled the whole textile Chain.

Pakistan is the fourth largest producer of cotton in the world has a relatively developed structure in basic textiles. There are more than 1,221 ginners providing cotton to spinning units with a capacity of over 10 million spindles and more than 170,000 rotors. The weaving sub-sector has about 20,500 shuttle-less/Air jet looms and 250,000 conventional looms. The industry produced 2.8 million tonnes of yarn and about 1,009 million sq meters of fabrics (Mill-sector) during the year 2009-10. Cotton fabric exports decreased 8% in terms of value, reaching an export figure of US$ 1.8 billion. Quality conscious markets like USA, Germany, UK, Hong Kong etc are major importers of Pakistan s textile products. Bulk of the textile products exported from Pakistan used to be basic textiles especially yarn and grey fabrics, but exports of value added items are now raising. With the new market access made available to Pakistan, its textile products have made considerable inroads in the international market place. Textile industry has the largest potential for boosting exports from Pakistan. At present this sector contributes more than 56% share in the export of country. Apart from its basic contribution of clothing the nation and at the same time earning largest foreign exchange through exportable items, The textile industry holds the key to the growth and expansion of the country s cotton economy, which continues to be the main cash crop.

At the time of independence of Pakistan only two textile mills were in existence. After independence, the process of development of the textile industry started picking up gradually. The remarkable progress of the power loom sector is due to favourable government policies as well as market forces. This sector is producing comparatively low value added grey cloth in unorganized sector. The power loom sector employs poor technology; it faces scarcity of quality yarn and lacks institutional financing for its development. The growth record of Pakistan s textile industry shows a reverse trend, especially in the weaving capacity of the mill sector, in which the installed capacity of looms shrunk from 26,000 in 1978-79 to only 8,000 in 2009-2010, the working looms were reported to be only 4,000. Thus, the organized sector seemingly made an all-out shift towards cotton spinning and almost completely gave up efforts to develop and modernize the weaving sector, Installed and working capacity of cotton textile weaving (mill sector) is given in Table-1. 

Source: Federal Bureau of Statistics, Government of Pakistan.

Pakistan fabric s range from coarse to super fine varieties, with coarse and medium varieties consumed locally during the past few years. The pattern of consumption has shifted from pure cotton to blended fabrics i.e. polyester/cotton, polyester/viscose, etc.

Production of cloth (mill sector) increased from 915 million sq. meters in 2005-06 to 1,009 million sq. meters in 2009-2010. The Unorganized loom sector produced more than 90% of the total fabric production. As a result the non-mill sector weaving capacity continues to occupy predominant position. The setting up of shuttle-less machines in this sector has resulted in high growth in fabric production. At present, the shuttle less weaving (organized and unorganized) is believed to be the largest consumer of cotton yarn in Pakistan. The Unorganized weaving sector, although quite large, contributes to the exports by way of the production of low quality sheeting fabrics.

At present most of weaving units are said to incurring losses in their operations and were forced to cut-down capacity utilization. The major causes are stated to be the rise in the prices of cotton yarn over the last two years. The hectic rise in cotton yarn prices also provides an insight to the serious cost-push problem faced by the entire fabrics manufacturing industry, including power looms and the rest of the textile ancillary industry such as hosiery garments manufacturers.

At present Pakistan s textile sector has made considerable advances in production capacity and capability past few years. During the past five years remarkable progress of the power looms sector was made in the country. The setting up off shuttle-less machines has resulted in high growth in fabric production. At present, the shuttle-less weaving is believed to be the largest consumer of cotton yarn in Pakistan.

The quality improvement in fabric production is directly related to the up gradation of technology in weaving and spinning sectors.

Import of textile weaving machines and parts increased from Rs 2.82 billion in 2008-09 to Rs 4.56 billion in 2009-10, thus showing an increase of 75%. Import of textile weaving machines and parts into Pakistan is given in Table-2.

Pakistan has lost competitive edge in international textile and clothing export market on account of high business costs and low labour productivity. The demand for textiles and clothing in the world is around $18 trillion, which is likely to be increased by 6.5% per annum. Pakistan has emerged as one of the major cotton textile product suppliers in the world market, with a share of world yarn trade of about 30% and cotton fabric about 8%, having total export of more than $10 billion which is 56% of the country’s total exports.

Export of cotton fabrics decreased from 2.63 billion sq meters worth US $ 2.11 billion in 2005-06 to 1.75 billion sq meters worth US $ 1.80 billion in 2009-2010, thus showing decline of 15% in terms of value. Export of cotton fabrics is given in Table-3.

Source: Trade Development Authority of Pakistan.

The country’s export profile of textiles reveals that the country has lost some of its most established markets, but exporters have found new export avenues that were neglected in the past. A tough competition in international markets and falling industrial output at home have hammered down the exports this year.

The major importing countries of cotton fabrics were Turkey, Bangladesh, Italy, Germany, USA, China, Korea, Brazil, Indonesia, UK and Singapore. It is interesting to note that fabric exports increased in many countries where Pakistan lost its yarn market. The country lost fabric markets in the US, Sri Lanka, Spain, Hong Kong, India and Vietnam. Major markets for Pakistan s fabric are Turkey, Italy, Bangladesh, USA, Sri Lanka, Germany and Belgium.  Country wise export of cotton fabrics is given in Table-4.

Source: Federal Bureau of Statistics, Government of Pakistan.

Pakistan textile industry appears to have failed to compete in international market despite availability of cotton locally, because of high cost of production, especially as the industry does not get power to run the machines, rising utility cost and cost of other inputs and poor law and order situation. Besides the economical and political factors attributable to the failure of textile sector to increase its share in the world textile trade, its corporate structure also shares the blame.

Since the removal of quota regime, Pakistan’s textile sector has been facing intense competition from neighbouring countries on export front.

Exporters have predicted further decline in shares of textile sector in overall export of the country if the present state of affairs continue to persist in the coming days.

To support investment for upgrading textiles machinery and technology, the government has issued Technology Up-gradation Support’ Order 2010 and has allocated Rs 40 billion towards various incentives allowed in the new Textile Policy 2009-14.  These included the opening of export marketing offices and warehouses abroad, 50% reimbursement of 3 foreign staff, 50% payment of one year rental and 50% subsidy for the acquisitions of brands and franchises.

On the other hand Federal government would give 50% mark-up support for new investments in machinery and technology, and 20% grant of capital cost for establishment of new plants in textile sector.

Year 2011 has been declared the year of exports and the Ministry of Commerce and Trade Development Authority of Pakistan (TDAP) have devised a comprehensive strategy to boost country s exports. Pakistan’s textile exports can rise to at least $ 15 billion in next two years from the present figure of $ 10 billion per annum by ensuring uninterrupted supply of gas, electricity and water at the affordable and supportive prices to the textile industry.

Source: Pakistan Textile Journal