Role Of Textile Industry In Pakistan Economy

An Overview Of Textile Industry in Pakistan 

Textile Industry in Pakistan is a term that originates from “texture” which is a Latin term that means “to weave”. Fabric is produced by weaving or knitting produces a fabric.


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Textile Industry In Pakistan
Role of Textile Industry In Pakistan


The Pakistan textile industry is usually considered a firmness of the Islamic Republic of Pakistan’s economy. Pakistan’s textile industry is the 4th Highest Cotton Producer, the 6th-largest importer of cotton, and the 3rd largest users of Pakistan.

Pakistan textile industry provides around 46% to the total output or 8.5% of the country's GDP. In Asia, Pakistan is the 8th largest exporter of textile goods employing 39% of the business of the country.

Pakistan’s textile industry is a major grantor to the national economy in terms of exports and employment. 

The textile sector is recognized as the backbone of the economy. On the other hand, it is facing strong conflict in the international market due to an increase in the cost of composition, which is making it limited competitive than the nearby countries China, Bangladesh & India.

According to Pakistan, Pakistan is amongst the top 10 textile exporters of the world. Textile export of world over is touching $400 billion outward of which China top of the list with already export of $55 billion, succeeded by Hong Kong $38 billion, Korea $35 billion, and Indonesia, India, Bangladesh, and Pakistan $11billion each.

HISTORY OF PAKISTAN TEXTILE INDUSTRIES

1950:

In 1950 the Textile industry was originated in our country. PIDC came into being which had the main purpose of industrializing the country in important fields. The renovated development of the sector began in 1953 with the dedication of the Valika Textile Mill at Karachi.

1960:

In 1960, there were about 180 units of textiles printing, bleaching, and processing, mostly located in Karachi and Punjab. Lately established mills were based upon shipped technologies but there was a lack of professional staff and lacks capital.

1970:

In 1970 there were 114 textile units and the industry had 2,610 thousand spindles and 31 thousand looms. After the division of East Pakistan Cotton Export Corporation of Pakistan was authorized which meant that largest of the private sector work was taken over by the government. The textile industry sustained heavy losses because the export of cotton was managed by the CEC.

1980

1980, There was a speedy growth in the spinning division until 1980-81 spinning stretched to expand. The 80s brought relief to the textile industry of Pakistan due to the inflation in the international business and industry-friendly policies of the government.

1990-98:

The world needs good quality, large-scale width fabrics produced, and replacement, and a modification process started. Machinations for producing garments and made-ups was also freed from import duty. As a result, a large expansion in the spinning division took place in the initial five years of the 1990s. 

1999-2008:

In Textile, exports participate total export of Pakistan has declined from 68% in 1997to 55% in 2008, as exports of other textile sectors developed Textile exports in 1999 were $5.2billion and mounted to become $10.5billion by 2008.

2009:

The textile industry is being hit difficult due to the ongoing power crisis, divesting the gas supply to the textile units for three days a week. Pakistan’s cotton farming has degenerated also due to several factors varying from the advancement of traditional varieties and via traditional techniques, secondary marketing, and defeat in making suitable payments to cotton farmers.

2010:

Notable changes to the general sales tax (GST) on the industrial sector including textiles industries of Pakistan. (APTMA) had prepared a based record for the federal government in which it has been calculated that the textile industry exports would pass over $16 billion corresponded to its existing level of about $8 billion.

2011:

Textile exports reached $12.5 billion from July 2010 to May 2011. The energy crisis devises Pakistan's textiles in difficulty.

2012:

Pakistan’s $13.8 billion textile industries striving to survive a sharp shortage of power to run its factories.10% of the spinning mills and fabric printing units have closed down, half of the surviving plants are trying to survive, thousands of textile labors were jobless, burned tires, and yelled slogans against the government of Pakistan.

2013:

Textile owners and labors were in protest

2014:

The new government has done a better achievement which may bring reconstruction in the textile sector of Pakistan.

During FY 2010-2011 textile exports of Pakistan have extended to develop in the initial nine months. According to the Federal Bureau of Statistics (FBS) and the Trade Development Authority of Pakistan TDAP, textile exports increased by 30.38% from July 2010 to March 2011. It conferred a positive sign in the constant decreasing textile industry of Pakistan and Exports during July-June (2012-13) were reported at $24.518 billion upon the exports of $23.624 billion registered during July-June (2011-12), showing definite growth of 3.78 %.; however, this development can be ascribed to the increase in the price of cotton and other figures along with a notable increase in terms of capacity as well.

TEXTILE INDUSTRY’S ECONOMIC CONTRIBUTION

Exports 60%

Manufacturing 46%

Employment 38%

Source: Economic Survey of Pakistan


Export of Pakistan Textiles 2020
Export of Pakistan Textiles


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Textile Export Performance 2020
Textile Export Performance 2013-2018




REASONS FOR DROP-IN GROWTH


The main causes of the crisis in the textile industry of Pakistan are as follows:

1. Lack of Research & improvement (R&I):-

The lack of research & improvement (R&I) in the cotton sector of Pakistan has produced in low quality of cotton in relating to the rest of Asia. Because of the consequent low profitability in cotton, farmers are turning to other cash crops, such as sugar cane.

2. Lack of modernizing equipment:-

The textile industry has out-of-date equipment and tools except for a few major generators. The inability to up-to-date improve the equipment and tools has managed to the drop of Pakistani textile competitiveness. Due to out-of-date technology, the value of production is higher in Pakistan as related to other countries like India, China & Bangladesh.

3. The increasing cost of production:-

The price of production of textile increases due to many causes like rising interest rate, double-digit expansion & decreasing value of the Pakistani rupee. The rising interest rate caused barriers in opening new production units & also improve the production price of existing units. The value of the Pakistani rupee is continuously diminishing which raised the cost of imported raw material. The elimination of subsidy & implementation of new taxes from the government also increases the cost of the product. The immediate increase in the cost of electricity also created an increase in composition. The above all cause raised the value of production of the textile industry which creates difficulty for the textile industry to struggle in the international market.

4-Electricity crisis:

As the importance of load shedding the textile composition range of various sub-sectors has been decreased. The delegates of all textile corporations performed their serious interests in the huge losses being caught due to electricity & gas load shedding and the immediate increase in the electricity bill. They stated that the industry has already been paralyzed due to report high load shedding.

5- Raw material Prices:-

Prices of cotton & other raw material utilized in the textile industry vary quickly in Pakistan. The accelerated increase in the price of raw material influences the cost of production seriously. Due to an increase in the cost of production, the need for export & home as well reduced which result in terms of downsizing of firms resulting in unemployment

6- Effect of Inflation

The rise in inflation creates an increase in the cost of products of textile goods which return in downsizing. The double-digit inflation is also concerning exports of textiles.

7- United States & EU cuts imports of textile from Pakistan:-

US & EU are the main importers of Pakistan textiles which produces a huge difference in the export of Pakistani textiles after forcing a limitation on the import of Pakistani textile goods.

8- Removal of subsidy on the Textile sector:-

The terms of Finance Bill 2009-10 are not textile industry-friendly at all. Requirements like the reintroduction of 0.5% minimum tax on home sales, 1% withholding tax on import of textile and features, 16% Federal Excise Duty on banking and insurance services besides the removal of exemption of 16% sales tax and 4% withholding tax on tools and parts in the Finance Bill 2009-10 are seriously affecting already paralyzed industry.

9- Export Performance of the Textile Sector:-

Due to the high cost of the product, power deficiency, and strong competition with geographical players, the export production of the Pakistan textile sector is suffering terribly.

10- Lack of new investment:-

Pakistan textile industry is facing the obstacle of Flat productivity due to its obsolete textile machinery. To defeat this problem and to stand in the competition, Pakistan Textile Industry will require huge expenditures.

11-Supply chain administration:

Another reason participating in the bad performance of our textile sector is the lack of efficient supply chain management and a centralized structure. Many economic and political factors restrict the ability of the exporters to meet their pledge suitable and may also result in failing business in the future.

RECOMMENDATIONS

Recommendations for the increase of the textile sector are as follows;

Revision of Government policies is needed:.

There are non-conducive government policies in terms of bank loans and interest rates. The hour requires to develop a comprehensible plan by the government that allows some sort of exemption/yielding to the textile sector. The government may give subsidies to share the weight of the industry.

Reducing the price of doing business in Pakistan:

At the present value of doing business in Pakistan is higher as related to the regional countries, which has developed in bitter competitiveness to Pakistani Goods in Foreign Markets. India and China are the more prominent competitors of Pakistan. We worry if the cost of executing business in Pakistan is not effected at par with other Asian countries, our products would get no place in the market both in terms of variety and cost. In the meaning of future trade, there is an important need to bring all the convenience charges and tax of taxes down to the least level.

Focus on Value Addition:

Pakistan is a leading exporting nation in yarn, cotton, and fabrics. If we emphasize on the value-added goods like garments, Hosiery, knitwear, and other textile made-ups, the export amount of textiles can be enhanced by manifolds. In this regard, top preference should be given to the stitching industry that leads to the most important value addition and employment creation.

Technology interventions:

Modern technology should be included to compete with other countries (China, Bangladesh & India) in the global market in terms of cost and quality.

Human Resources Development:

The Textile Board should discover a separate training unit as a Center of Human Resource Development wherever training programs should be managed for the capacity raising of labor. There is also an urgent need to expand the number of such Vocational Institutions wherever modern technological education is rendered.

Decent Energy Supply:

According to specialists, it is expected that in recent past around 800 units have terminated in Punjab during power and gas load shedding while approx. 500,000 operators lost their jobs. To save the industry, there must be a special treatment with the industry in constant energy supply.

Investment in Textile Sector:

The investment amount is not satisfactory in the textile sector as contrasted to the possibilities available. The government should take a serious step to sustain the textile industry. To decrease the rate of raw material for textiles, we need to extend our production ability.

ROLE OF GOVERNMENT:

Textile industries are the resolution of a Pakistan economy and the Pakistan government always obtaining an interest in the textile sector. The share of the textile industry in the market along with its contribution to exports, employment, foreign exchange earnings, investment, and value-added makes it the only largest manufacturing sector for Pakistan. It provides around 8.5% to GDP, employs 38% of the total manufacturing labor force, and contributes between 60-70% to total stock exports.

So this way Government starts several of the projects in the textile sector by the support of the ministry of textile and some additional private investors, for reaching peak position in the world.

Near about 6 textile projects are under the process that will be developed in the next upcoming years. Name lists of projects are given here.

  1. Export development plan implementation unit (EDPI)
  2. Pak_korea Garment technology instituted (PKGTI)
  3. Lahore Garment city (LGC)
  4. Faisalabad Garment city (FGC)
  5. Karachi Garment city (KGC)
  6. Pakistan textile city limited (PTCL)

SECTORS OF TEXTILE INDUSTRY:

PARTS OF PRODUCTION:

Cotton is an industrial asset of Pakistan, it is a natural fiber used primarily as a raw material in the textile industry. World cotton production is estimated at at118.8 million bales in 2007-2008.

COTTON:

Leading producers of cotton include the USA, India, China, Pakistan, and turkey. Both Punjab and Sindh are the important cotton-growing provinces, whereas KPK is not recognized for developing cotton production.

FIBER:

Cotton was originally used as a raw material in yarn making but the increasing demand for blended yarn and fabrics has changed the raw material origin towards the man-made or synthetic fiber in Pakistan. Pakistan usage is currently at 74 % cotton and 26 % man-made fiber, whereas the world fiber mix is 45 % cotton and 55 % man-made fiber.

SPINNING:

Spinning is the method of converting fibers into yarn. The fibers may be natural fibers such as cotton or man-made fibers such as polyester, Nylon. Sometimes, the terms spinning is also used for the reproduction of man-made yarn (that is not made for fibers). What so regularly is the case the final product of spinning is yarn. It consists of:

  • Blowing and mixing
  • Carding
  • Combining
  • Drawing
  • Simplex
  • Ring Spinning
  • Cone Winding

WEAVING:

The weaving sector is one of the most prominent textile sub-sector. The exports of woven fabrics and other related woolen made-ups from a major part of textile exports from Pakistan. Weaving is a process that turns yarns into cloth. The machine adopted for weaving is the loom. It comprises of Wrapping, Sizing, and Weaving

COTTON GINNING SECTOR:

Leading producers of cotton include the USA, India, China, Pakistan, and Turkey. The modern market share of cotton in 56 % in all fibers. Textile fibers are classified into three basic classes according to their sources such as cotton fiber, man-made fiber, and wool.

There are 1221 ginning plants in the country. The ginning industry has established a capacity of more than one million packages on a single shift basis and a total capacity of around 20million bales on three-shift stands.

COTTON SPINNING SECTOR:

Pakistan has the 3rd largest spinning position in Asia with a spinning capacity of 5% of the whole world and 7.6% of the potential in Asia. Pakistan maturity rate in this sector has been 6.2%per annum.• At present, the cotton-spinning sector is comprised of 422 textile units (50 composite units and 471 spinning units) with 10.1 million spindles and 114 thousand rotors in control with capacity utilization of 89 % and 60 % respectively, during July-Mar 2007-08

WEAVING & MADE-UP SECTOR:

There are three various sub-sectors in weaving, Integrated, independent Weaving Units, and Power Loom. This sector is offering comparatively low value-added Grey Cloth of often substandard quality. But, the performance of the cloth sector held far better than last year and charted the growth of 12.6 % during July – March 2007-08.

Textile Value Chain Process:

The cotton value chain begins from Ginning that adds value to it by separating cotton from seed and impurities but Spinning can well be called the first process of the chain that adds worth to cotton by converting into a new product i.e. conversion from ginned cotton into cotton yarn. Because spinning is at the beginning of the value chain, so all the following value-added methods of weaving, knitting, processing, garments, and manufacturing are dependent upon it.

If the spinning industry performs sub-standard yarn, its effect works right across the whole value chain. The spinning sector forms the core of the textile industry. This sector produces yarn for downstream sectors, particularly weaving, processing, and knitting. Pakistan is the 3rd-largest player in Asia with a spinning potential of 5% of the total system and 7.6% of the capacity in Asia. Pakistan’s growth rate has been 6.2% per annum and there amongst the major players.

Present Condition of Pakistan Textile Sector 

Pakistan as we all understand Pakistan is suffering a lot of problems in the shape of terrorism unemployment health issues etc. Agriculture is the most booming business in Pakistan. 2nd largest business of Pakistan is the textile industry. Textile is the single biggest industry in Pakistan.

In Pakistan, there are only a few universities that are giving education related to Textile Engineering, Technical Textile, Textile Designing That’s why the textile sector has a very mean ratio of educated characters in Pakistan.

Pakistan Current Textile Working Mills


Pakistan Textile Working Mills 2020
Pakistan current Textile Working Mills



Province Wise Textile Mills Of Pakistan


Province Wise Textile Mills Of Pakistan
Province Wise Textile Mills Of Pakistan




Pakistan Import Textile Machinery




Pakistan Import Textile Machinery
Import of Textile Machinery





Pakistan textile exports fall by 4.46 % amid COVID-19


The country’s textile exports reached $1.039 billion in March 2020 as matched to $1.088 billion in the same month of the previous year, according to the latest data of the Pakistan Bureau of Statistics (PBS). Pakistan’s textile and clothing exports had dropped nearly 17 % year-on-year in February. But, in March, the textile exports had decreased by 4.46 percent due to the impact of coronavirus (COVID-19).

The decrease in textile exports became also decreased the country’s overall exports during March. The country’s export of goods had drooped by 8.46 %year-on-year to $1.807 billion in March, from $1.974 billion amid the closure of local outlets in the wake of the coroThe control of the Pakistan Textile Policy for 2020-25 with a four-tier policy and 21 recommendations is all established to be pitched any time ere the ECC (Economic Coordination Committee) for consent. It will attempt to increase the country’s textile export destination by 2025 to $25.3 billion and $50 billion by 2030. It meant $13.33 billion in 2018.

The draft of the Textile Policy also spells out its the purposes which include 1) Curing profitability of cotton farmers by growing cotton yield, improving the quality of cotton, and reducing the cost of production for the farmers; 2) Strengthening the manmade fiber/filament sector to make this chain globally competing and export-oriented; 3) Regionally competing energy pricing set for five years; 4) Prompt Sales Tax Refund System; 5) Abolition of Zero- Rating has created a serious liquidity crisis for exporting sectors as the current refund system is soaking up market liquidity and is not working; 6) Long Term Financing Facility for the entire textile value chain; 7) Revival of impaired textile capacity and induction of bankruptcy law. 8) Establishment of Textile clusters and Export Processing Zones with plug and play facilities.

It says that the global textile trade that stands at $837 billion had an average growth rate of 0.1% over the last decade. When it comes to the global market for textile sector exports, it is dominated by China, which accounts for over 32pc of textile division exports, valued at $266 billion. Shortly, Pakistan’s share is 1.6pc in the world textile trade, which will be raised to 3% by 2025. 

The world textile export that reaches $837 billion will reach $843.35.

The textile export growth comparison of Pakistan and regional peer countries shows that our regional competitors have surpassed Pakistan manifold. Pakistan was once the best player in the textile trade but over the last decade, our textile sector growth has remained dismal owing to several policy limitations and lack of an enabling environment necessary for industries to flourish.

Two decades back, Pakistan’s textile exports were ahead of its regional peers like Bangladesh, Vietnam, and Cambodia. In 2003, meanwhile, Pakistan’s textile exports were $8.3 billion, Vietnam’s textile exports were $3.87 billion, Bangladesh’s were at $5.5 billion. Now Vietnam is $36.68 billion and Bangladesh is at $40.96 billion.

The textile policy draft argues saying that the essence is that if these countries were able to reach record growth in this short period, the goal of giving $50 billion of textile exports in the next 10 years for Pakistan is reachable, subject to the stringent implementation of Long-term Textile Policy.

Mentioning about the roadmap to export growth, it mentions that the ultimate goal of export-led growth is poverty reduction and enhanced welfare of Pakistan’s citizens. Rapidly growing exports and millions of new jobs created, along with skill upgrading, will increase productivity and wages, which over the long term is the only sustainable way to enhance living standards. Moreover, an ambitious strategy has been formulated to move from low value-added semi-processed textile exports to high value-added garments and fashion items.

A growth rate point has been set beginning from 10pc in the first year of FY20 and slowly adding up to 13pc in the fifth year would reach almost $25 billion exports in the first stage of 5 years and for the second stage of 6 years 2025-30, a growth rate of 15pc to 16pc on combining basis be taken to achieve the target of $50 billion exports.

The graphs and statistics mentioned in the Textile Policy show that growth in textile exports in FY20 will be at $14.66 billion, in FY21 $16.13 billion, in FY22 $17.90 billion, in FY23 $20.05 billion, in FY24 $22.46 billion and FY25 the textile exports will be at $25.38 billion. And summarily in the next five years, from 2025 onward to 2030, the textile exports will be at $50.15 billion.

It also highlighted the financing required to deliver the export growth target, saying that Pakistan’s investment-to-Gross Domestic Product (GDP) ratio has been floating around 15pc while countries like China, India, and South Korea have sustained the ratio above 30pc to put their respective economies on a sustainable path. And to improve job creation, productivity, and exports, the investment-to-GDP ratio, the Pakistan Textile Policy plan says, should be increased to at around 20pc.

To accomplish the targeted exports, business-friendly policies should be ensured for the industry to grow and further achieve increased targets. "Our industry cannot achieve any ambitious target within a short period since there are various complex issues, including the development of infrastructure which impedes growth," it says.navirus. The PBS data revealed that country’s textile exports had improved by 4.24 percent and recorded at $10.41 billion in 9 months (July to March) of the current monetary year.

Textile Policy 2020-25

The control of the Pakistan Textile Policy for 2020-25 with a four-tier policy and 21 recommendations is all established to be pitched any time ere the ECC (Economic Coordination Committee) for consent. It will attempt to increase the country’s textile export destination by 2025 to $25.3 billion and $50 billion by 2030. It meant $13.33 billion in 2018.
The draft of the Textile Policy also spells out its the purposes which include 1) Curing profitability of cotton farmers by growing cotton yield, improving the quality of cotton, and reducing the cost of production for the farmers; 2) Strengthening the manmade fiber/filament sector to make this chain globally competing and export-oriented; 3) Regionally competing energy pricing set for five years; 4) Prompt Sales Tax Refund System; 5) Abolition of Zero- Rating has created a serious liquidity crisis for exporting sectors as the current refund system is soaking up market liquidity and is not working; 6) Long Term Financing Facility for the entire textile value chain; 7) Revival of impaired textile capacity and induction of bankruptcy law. 8) Establishment of Textile clusters and Export Processing Zones with plug and play facilities.
It says that the global textile trade that stands at $837 billion had an average growth rate of 0.1% over the last decade. When it comes to the global market for textile sector exports, it is dominated by China, which accounts for over 32pc of textile division exports, valued at $266 billion. Shortly, Pakistan’s share is 1.6pc in the world textile trade, which will be raised to 3% by 2025. 
The world textile export that reaches $837 billion will reach $843.35.The textile export growth comparison of Pakistan and regional peer countries shows that our regional competitors have surpassed Pakistan manifold. Pakistan was once the best player in the textile trade but over the last decade, our textile sector growth has remained dismal owing to several policy limitations and lack of an enabling environment necessary for industries to flourish.
Two decades back, Pakistan’s textile exports were ahead of its regional peers like Bangladesh, Vietnam, and Cambodia. In 2003, meanwhile, Pakistan’s textile exports were $8.3 billion, Vietnam’s textile exports were $3.87 billion, Bangladesh’s were at $5.5 billion. Now Vietnam is $36.68 billion and Bangladesh is at $40.96 billion.
The textile policy draft argues saying that the essence is that if these countries were able to reach record growth in this short period, the goal of giving $50 billion of textile exports in the next 10 years for Pakistan is reachable, subject to the stringent implementation of Long-term Textile Policy.
Mentioning about the roadmap to export growth, it mentions that the ultimate goal of export-led growth is poverty reduction and enhanced welfare of Pakistan’s citizens. Rapidly growing exports and millions of new jobs created, along with skill upgrading, will increase productivity and wages, which over the long term is the only sustainable way to enhance living standards. Moreover, an ambitious strategy has been formulated to move from low value-added semi-processed textile exports to high value-added garments and fashion items.
A growth rate point has been set beginning from 10pc in the first year of FY20 and slowly adding up to 13pc in the fifth year would reach almost $25 billion exports in the first stage of 5 years and for the second stage of 6 years 2025-30, a growth rate of 15pc to 16pc on combining basis be taken to achieve the target of $50 billion exports.
The graphs and statistics mentioned in the Textile Policy show that growth in textile exports in FY20 will be at $14.66 billion, in FY21 $16.13 billion, in FY22 $17.90 billion, in FY23 $20.05 billion, in FY24 $22.46 billion and FY25 the textile exports will be at $25.38 billion. And summarily in the next five years, from 2025 onward to 2030, the textile exports will be at $50.15 billion.
It also highlighted the financing required to deliver the export growth target, saying that Pakistan’s investment-to-Gross Domestic Product (GDP) ratio has been floating around 15pc while countries like China, India, and South Korea have sustained the ratio above 30pc to put their respective economies on a sustainable path. And to improve job creation, productivity, and exports, the investment-to-GDP ratio, the Pakistan Textile Policy plan says, should be increased to at around 20pc.
To accomplish the targeted exports, business-friendly policies should be ensured for the industry to grow and further achieve increased targets. "Our industry cannot achieve any ambitious target within a short period since there are various complex issues, including the development of infrastructure which impedes growth," it says.

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