History of Pakistan Textile Industry

Increase in the cotton production and expansion of textile industry has been impressive in Pakistan since 1947. Cotton bales increase from 1.1 million bales in 1947 to ten million bales by 2000. Number of mills increased from 3 to 600 and spindles from about 177,000 to 805 million similarly looms and finishing units increased but not in the same proportion. It employs 50% of industrial labor force and earns 65% foreign exchange of total exports. Pakistans textile industry experts feel that Pakistan has fairly large size textile industry and 6070% of machines need replacement for the economic and quality production of products for a highly competitive market. But unfortunately it does not have any facility for manufacturing of textile machinery of balancing modernization and replacement (BMR) in the textile mills which need to think about joint ventures for the production of complete spinning units with china, Italy and production of shuttle less looms (Projectile) with Korea, Taiwan and Italy. Cotton textile industry has been premier industry in Pakistan and a major source of export earning and employment. It also helps in value addition to the manufacturing sector of the economy. During the six years between 1993 and 1998, production of yarn (in quantity terms) registered a steady annual growth rate of 302% in Bangladesh and 405% in India. On the contrary, Pakistan registered a growth rate of 101% per annum in yarn production although it ranked third after China and India in the global yarn production during the same six years. In exports, while Taiwan, India and the republic of Korea registered an annual increase of 18.1%, 27.7% and 5.4% respectively during 1993-1998, Pakistan registered a negative growth of 4.8% one important development was that till 1997, Pakistan was the worlds largest exporter yarn followed by India. However, in 1998, India gained the NO 1 position, leaving Pakistan at NO 2 In the case of cotton cloth production, a number of Asian countries have been emerging in the international market to compete with Pakistan. These countries are Bangladesh, India, Taiwan, Indonesia, Thailand, Turkey, Sri Lanka and Iran. The latest available date on overall export performance of Pakistan comported with some regional countries is given in table 1: The above-mentioned presentation in the context of international scenario highlights the adverse position of Pakistans textile industry when is likely to continue further following the full implementation of WTO agreement from 2005 onwards when an era of free trade will start globally. Notwithstanding the above fact, current stagnation in the local textile industry can be overcome through efforts, consistent with charges occurring in the international market. It must be appreciated that all successive governments since the birth of cotton textile industry in Pakistan have been encouraging the textile exporters to penetrate into new market and also to broaden the base of exportable commodities by including value added textile goods so that reliance on exports of cotton, cotton yarn and coarse fabrics gradually become minimal. Reflecting on the state of affairs, Abid Chinoy, Pakistan cloth merchants Association (PCMA) Chairman, Appreciated governments efforts to encourage new exports and finding new markets, which need aggressive export marketing.

The steps taken on the monetary front, such as the frequent devaluation of Pak rupee in terms of dollar could not improve the cost competitiveness of exportable products due to increase in prices of the local and imported inputs of the local textile industry, and also due to inelastic demand for the Pakistans exports. It has been rightly mentioned in the latest stage bank of Pakistans annual report (FY01) that, Over the years Pakistans exports receipts have been vulnerable on account of the narrow base of exportable items, concentrated markets and low value addition this indicated that the growth in the countrys overall exports, including textile products which contributed more then 60% of total export receipts each year, could to be related some cosmetic and ad hoc measure like devaluation of Pak rupee and concession export credits. The first textile commission, which was constituted by the first material law government in 1960 had, inter-alia, recommended that an economic size textile unit should preferably have 25,000 spindles and 500 looms. No new mill with only 12,500 spindles and without looms should be sanctioned. However, no need was paid to the advice by the sanctioning authorities with the result that an excess capacity had tented to build up in the spinning sector. During the period 1973 to December 1992, some 71 spinning units with 1,136, 835 spindles, 6,600 rotors and 7,329 looms were closed down. In 1992, a foreign consultant form was hired by the government to look into the stagnating conditions in the local textile industry. One of the observations of the foreign consultant was Pakistan has failed to make real progress in the international market and is being over taken by many of the neighboring competitor countries. The spinning sector, traditionally the core of the industry, is already in the crisis with many spindles lying idle and mills being forced to close. Worse still, this sector will be hit by the projected decline of its major markets in Japan and Hong Kong in the coming years. Another important strategic recommendation given by the foreign consultant very much relevant to the current Conditions: It is vital that companies play very positive role in the markets, which each one having its own marketing activity, whose job is to understand the need of the customers and the ever changing competitive dynamics of the markets. In order to improve exports, Pakistans Readymade Garments Manufacturers and Exporters Association (PRGMEA) has urged the commerce minister Abdul Razzak Dawood to set up an Apparel Board for the promotion of export of woven and kit garments which fetch US$ 2.5 billion foreign exchange for the country. The industry experts are of the opinion that in the order to have a strong industrial base, Pakistan economy need investment upswing. Pakistans economic growth performance during recent years has been dismal: as against the average growth rate of 6.1% in the 1980s, the half and 4.0% in the 2nd half of the 1990s. The major micro-economic instability factors like high inflation rate, budgetary deficit, continuous depreciation of rupee, economic sanctions, etc. could not help the investment process. Such an environment cannot be conducive to investment and growth. Exporters of textile products have found the target of US$ 10.4 billion set by the government for the year 2002-2003, as achievable and termed it a realistic approach. The textile sector which constituted 69% of total export during 2001-2002, believes that enhanced quota by the European Union and Turkey would make this possible to fetch another US$1 billion this year.

The rise in export of value-added products from Pakistan was another point of encouragement for the textile sector. The export of value-added products rose to 57.4% from 53.9% last year-a clear sign that we are moving in the right direction, said the Chairman of all Pakistan textile mills association. The trade policy is considered an acceptable paper, but in the industry does not fine anything that could lead to a high level exports achievement and remove trade imbalance. Pakistans textile sector earned US$5.77 billion during the outgoing year, compared with US$5.577 BILLION OF 2000-2001 indicating a growth of 0.69%. Textile vision 2005 has identified the present status and opportunities to make in roads in conventional and hew markets and has developed sectoral recommendations, hence the sectoral committees set up by the federal textile Board (FTB) would play an important role be ensuring the availability of quality raw materials on competitive prices and improvement in designing, and would adopt quality standards and increase productivity levels. It would attract foreign brands and promote Pakistani brands with world-class standers. With such a positive trend, Pakistans textile sector is getting rid of old impediments and gearing itself up for the new opportunities in the new trade regime. Conclusion: The textile industry of Pakistan plays an important role in earning foreign exchange, providing employment to the country. But with the ending of quota system in world, Pakistan textile loses share in world trade of textile products. Pakistan textile products will have a big potential to capture big share of world trade but there are lots of reasons which forces to step back from using the full capacity of textile machinery to earn more and more foreign exchange for the country. In upcoming year, Pakistan textile exports are 10-11 billion US dollars approximately. Government of Pakistan is not serious in resolving problems like shortage of electricity and gas which forces the textile exporters not to take orders because not fulfill the orders on time. With these reasons import of textile machinery declined year on year basis. With all these reasons Pakistan textile owners use old machinery which is less efficient and not up to the mark with the competing countries. If Government of Pakistan does not take immediate steps to counter all these problems then Pakistan trade deficit will raise more as compared to FY09-10 due to this Pakistan rupee will depreciate more.