1. 1.

Overview of Pakistan textile industry: The global cotton and textile communities
are facing historically volatile times, regardless of which part of the supply chain
they belong to. Without question, the problem our industry faces are significant but they are by no means insurmountable. In this new era, success will require a
level of communication and transparency greater than we have ever had in the
past, and this is an opportunity that we can take advantage of. The Textile
Ministry by developing closer ties within the business organisations and interindustry platforms, both upstream and downstream, can do much more than
simply survive these dangerous times: It can proactively build a better, healthier
and stronger national textile industry that can benefit the economy and sustain
longterm export growth, once the current period of market turbulence subsides.
This is a time where it is of paramount importance that by regularly discussing
strategies with the stakeholders, the authorities ensure that the national cotton
trade functions more smoothly in all sectors, so that we can ensure to not just
successfully ride the present crisis, but also manage ourselves in a way that we
can possibly avert one in future. Neighbouring India, even after an extreme
slowdown, is still growing at more than 6 percent per year; whereas, Pakistans
growth average during the past four years has been barely 2.50 percent. At least
two million new workers enter our labour market every year, which means that if
we cannot match this with corresponding growth, the problems with
unemployment and poverty will compound. The sad reality at present, however,
points to a climate where our industry is instead operating at about 30 to 40
percent below capacity. The textile sector
2. 2. accounts for approximately 38 percent of our entire labour force and an
operating level of 60 percent basically means a job loss in this sector alone of
about one million workers. Ironically, in textiles, not international demand or
global management, inefficiencies have been the main culprits, but the sheer
choking of power (electricity) and energy (natural gas) has forced closures
resulting in the loss of global market share. Comparing this with 2007, when the
industry was operating on full capacity, it means: Whereas, in four years an extra
3.20 million fresh young employable workers should have been absorbed in the
textile sector, it is at present accommodating one million than its peak back in
2007! Running an industry per se is becoming untenable, especially in Punjab,
where it is forced to close for nearly 170 days a year for want of power and
energy. Little wonder that our textile exports are falling, rather than registering an
increase. Based on the figures recently released by the Ministry and verified by
the respective Chambers, if we compare January 2011 to January 2012 in

quantity terms, the total textile exports have registered a decline of 15.37 percent,
and the sector wise decrease reads as textiles and clothing by 16.81 percent,
knitwear by 34.79 percent, bed wear by 30.24 percent, towels by 21.76 percent,
readymade garments by 24.46 percent, art silk and synthetic textiles by 44.29
percent and other made-ups by 28.16 percent. Even more disturbing is the trend
that the exports of higher value items have fallen at a much higher rate than the
less valued ones and, alarmingly, the products that in competing manufacturing
economies are regarded as raw materials, have actually gained their share of
exports! For example, raw cotton exports have registered an increase of 397.42
percent, cotton yarn one percent and yarns
3. 3. other than cotton yarn by 2,287.50 percent. Value addition as we know has
been a weakness of Pakistani textile exports, as we continue to operate at one of
the lowest per kilogram values amongst the principal textile manufacturing
countries of the world. And it is this very weakness, which our Textile Ministry
needs to guard against and strategise to somehow overcome. The Indian Ministry
as we know goes to great lengths in policy formation to ensure that the
operational framework supports a culture where the industrial potential of value
addition gets maximised - in spite of no real global or domestic shortage of
cotton, we saw India place a ban last month on its cotton export to see to it that
priority lies with conversion of the basic commodity into finished cum made-up
goods - this in order to generate both additional foreign exchange revenues and
employment. At our end, one is not too convinced that our policymakers are even
thinking through this aspect of our trade dynamics. Recent key decisions on
enhancing trade with India seem to have been taken in haste and without
ensuring the fair element of reciprocity. While it is understandable to grant the
MFN (Most Favoured Nation) status to India, in doing so we needed to protect
our industrial strengths by guaranteeing fair access to the Pakistani products
where we add good value and enjoy a competitive edge over India, e.g. home
textiles, towelling, cement, sports goods, surgical instruments, specialised
consumer products, processed meat, livestock, etc. Even the EU concessions
package does not seem to be that exciting when one takes into account that the
majority of their concessions apply to items that fall in the category of feeding
cheap raw materials to the European manufacturing, instead of promoting value
addition in Pakistan. Also, the strong growth items for us like bed linen, bulk of
home textiles, towels, etc have either been
4. 4. excluded or have been placed under the ceiling of tariff related quotas. So
what is the way forward? First and foremost, we (the Pakistani textile industry) in

guidance from the policymaker (the Textile Ministry) need to be more proactive in
our decision making by focusing on long-term positioning, instead of current or
short-term profit taking. Turkey, India and China started basing their textile
policies on such a premise, way back in the 80s and see where they are today.
Their textile sector continues to grow in all its dimensions and the sheer strength
of product value addition over time has supplemented the development of their
domestic markets and in helping them to evolve as leading textile machinery
suppliers of the world. Pakistan in this regard still has a long way to go. Further,
going forward our industry needs enhanced transparency, predictable
government policies, better supply chain management and an awareness, both
within the government and the private sector, of using the newly developed global
hedging instruments to achieve stability in cotton and MMF (Man-made Fibre)
supplies, boost production, and to alleviate possibilities on future tight stock
situations. Second, all participants in the industry can show leadership by
advocating that the government/Ministry does a better job of statistical reporting.
Companies can also lead by participating in surveys of production, consumption
and stocks when such data is requested. Common use of metric measures can
help all stakeholders to speak one language of statistics that the bureaucracy can
understand. Third, we need to remember that there have been notable
improvements in the efficiency of trade in textiles since the ending of the
Multifibre Arrangement (MFA) in 2005, and attempts by anyone (association,
lobby group, etc) to
5. 5. take it backward through requests to the government for trade protection
should be strongly discouraged. Finally, the Textile Ministry should take its cue
from their Indian, Chinese and Bangladeshi counterparts by actively collaborating
with the World Bank to make use of its initiative to deliver training to industry
managements, trade associations and the regulatory body on how to effectively
use various hedging mechanisms and devise intra-industry policy frameworks to
ensure smooth and long-term functioning of the entire industrys supply chain
process.
6. 6. Textile Industry of Pakistan: The Pakistan textile industry total export is around
9.6 billion US dollars. The textile industry contributes approximately 46 percent to
the total output or 8.5 percent of the country GDP. In Asia, Pakistan is the 8th
largest exporter of textile products providing employment to 38 percent of the
work force in the country. However, the textile industry currently faces massive
challenges. The textile sector enjoys a pivotal position in the exports of Pakistan.
In Asia, Pakistan is the 8th largest exporter of textile products. The contribution of

this industry to the total GDP is 8.5%. It provides employment to about 15 million
people, 30% of the country work force of about 49million. The annual volume of
total world textile trade is US$18 trillion which is growing at 2.5 percent. Out of it,
Pakistans share is less than one per cent. The development of the Manufacturing
Sector has been given the highest priority since Pakistans founding with major
stress on Agro-Based Industries. For Pakistan which was one of the leading
producers of cotton in the world, the development of a Textile Industry making full
use of its abundant resources of cotton has been a priority area towards
industrialization. At present, there are 1,221 ginning units, 442 spinning units,
124 large spinning units and 425 small units which produce textile products.
Pakistans textile sector earned US$5.77 billion during the 2003 year, compared
with US$5.577 BILLION OF 2000-2001 indicating a growth of
7. 7. 0.69%. The total exports of textile sector in 2004 were US 5.7 billion which
shows 2.5% growth it increase to 4% growth in 2005 as compared to 2004.The
textile sector shows 8% negative growth in 2006.The negative growth continue in
2007 aslo with the value of 5%.The textile sector shows 15% growth in 2008.
Now we will discuss the main reasons of crisis in textile industry step by step in
detail. a. Lack of Modernize Equipment Moreover, critics argue that the textile
industry has obsolete equipment and machinery. The inability to timely
modernize the equipment and machinery has led to the decline of Pakistani
textile competitiveness. Due to obsolete technology the cost of production is
higher in pakistan as compared to other countries like India, Bangladesh & china.
b. Raw material Prices Prices of cotton & other raw material used in textile
industry fluctuate rapidly in Pakistan. The rapid increase in the price raw material
effect the cost of production badly. The increase in raw material prices fluctuate
rapidly due to double digit inflation. Sealand Logistics Solutions is helping textile
oriented comanies with the help of logistics solutions in importing modern
equipment and make valuable connections with reliable leading raw material
provider at very competitive prices.