In this Assignment i have explained a overview of Pakistan textile Industry

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 inter-industry 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,
Pakistan’s 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. 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. 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. 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. 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 industry’s supply
chain process.

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, Pakistan’s
share is less than one per cent. The development of
the Manufacturing Sector has been given the highest
priority since Pakistan’s 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.
Pakistan’s 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. 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.
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8. NAME: SHAIKH WALEED AHMED
CLASS: (BPA) PART 2
ROLL NO: 22/81
SUBJECT: (IDP)
TOPIC: TEXTILE INDUSTRY OF
PAKISTAN
SUBMMITED TO:
SIR, LASHARI ALI RAZA