Future Prospects of Textile Industry in Pakistan

Future Prospects of Textile Industry in Pakistan
Future Prospects of Textile Industry

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Future Prospects of Textile Industry in Pakistan is going to be very crucial in upcoming years because, In Pakistan, the textile sector contributes approximately 1/4 of industrial value-added and allows employees to about 40% of the industrial labor strength. Barring seasonal and cyclical fluctuations, textile commodities have maintained an average share of about 60% in nationwide exports. Pakistan’s textile experts also suggest that the ancillary textile industry adds cotton spinning, fabric processing, home textiles, cotton cloth, cotton yarn, cotton fabric, towels, hosiery and knitwear, and ready-to-wear garments, these components are being produced both on a big scale manufacturing classified sector also as in the random cottage/small and medium units.

Future Prospects of Textile Industry in Pakistan
Future Prospects of Textile Industry In Pakistan

Future Prospects of Textile Industry in Pakistan

The economic advisor stated in the economic report of Pakistan that the spinning sector which is the resolution in the ranking of textile production. Shortly, as per record of Textiles Commissioner’s Organization (TCO), it contains 520 textile units (40 composite units and 480 spinning units) with 13.43 million spindles and 201 thousand rotors installed and 11.40 million spindles and 130 thousand rotors in operation with capacity utilization of 85.5% and 64% respectively. The government statistics also point that the issues of the power loom sector grow principally because of the weak technology and scarcity of quality yarn. It is also calculated that the looms placed in cotton textile mills are 9,088 and Looms operated were 6,390. Moreover, the production of cotton cloth has lingered idly which slightly raised by 0.03% while the exports in terms of quantity slightly declined by 0.80% whereas in value terms grew by 0.04 percent.

Being a value-added segment of the textile industry made-up sector comprises different subgroups namely towels, tents & canvas, cotton bags, bedwear hosiery, knitwear & readymade garments counting fashion apparel. The government statistics also showed that the industry sustains a direct livelihood of 211,000 skilled workers and 490,000 unskilled workers. Another 350,000 people benefit from allied cottage industries. Thus, the industry contributes, directly and indirectly, sustenance to well over a million people. Knitwear exports consist of knitted and processed fabrics knitted garments; knitted bed sheets, socks, etc., and have the largest share 35% in textile exports.

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Pakistan Textile Industry Facing Challenges

Now we come to the agricultural sector as we all know Pakistan is an agrarian administration but still, it is a net importer of food items. Agricultural agreement by WTO plays a significant role in making Pakistan’s agricultural policies. This agreement is called Agreement on Agriculture (AOA). This recognition tells us about export subsidies, access to the market, and domestic support. 

Pakistan needs to utilize its resources, it should manufacture and export such things as meat, dairy products, fruits, vegetables, horticulture, etc. Pakistan and other emerging countries want a world exchanging system or fair system of trade. Pakistan also has a corresponding advantage in many other fundamental commodities. Although Pakistan has a comparative advantage it should complete the domestic requirements. An Agreement was signed named Trade-Related Aspects of Intellectual Property Rights (TRIPS ). According to this, it is guaranteed that the effective protection of property rights on imported goods and the same guaranteed for the domestic industry of Pakistan.

Duties are the main and largest component of advanced and developing countries. Below ineffective and expensive services infrastructure, no state can develop. The contribution services sector is more than half of the GDP. Pakistan signed an agreement named General Agreement on Trade in Services (GATS). Pakistan signed it to commit trade in services such as economic services, well-being as well as public services, commerce services, telecommunication services, tourism and travel-related services, structure, and producing services.

Pakistan faces the domestic problem of increased imports. WTO Agreements have a natural method providing for trade corrective measures to offset the effect of removal, subsidy, and flow of imports. as a result, Pakistan comes up with antidumping law through general legislation, countervailing duty against the subsidy, and safeguard action laws against the flow of imports to protect the domestic industry.

Current Problems Of Textile Industry In Pakistan

One big issue was the exchange rate which kept under control by the last government artificially due to which Pakistani Exportable Products persisted expensive globally until devaluation began. Further, input cost increased considerably related to the procurement of cotton and energy whereas this aspect seems never-ending. Last but not the least, the Textile Industry itself hesitates to grow into the manufacturing of Value Added products which are evident from the percentage of value-added output increasing as compared to basic textile products i.e. Yarn. Now, after the devaluation of the Pak Rupee, exports from this sector at large will be increased in short term but the effect of devaluation will be offset by an increase of different input costs in the longer run. The previous government has controlled Pak Rupee devaluation by injecting foreign loans which resulted in an influx of imports into Pakistani markets and made our exportable items expensive globally. They also took heavy loans from local Banks and increased government spending which increased Money Supply. Due to this cosmetic positive scenario of the economy where inflation was around 3%, the SBP discount rate was too low resulting in more economical Finance Cost of Businesses.

On the contrary present government aggressively devaluated the local currency by not taking more loans for controlling the exchange rate artificially. This resulted in Pakistaniexportable products cheaper in the international market which attracted future orders in return. But on the other hand interest rates increased almost double which increased finance cost respectively. Due to massive devaluation, the cost of producing energy increased together with the cost of spare parts for maintenance and dyeing chemicals for value-added products. Moreover, the cotton price in Pakistan is too high if it may be compared to regional cotton producers like India because Pakistan lags behind cotton-producing targets each year.

Conclusion Of Future Prospects of Textile Industry in Pakistan

Pakistani textile industry recognized the backbone of the export sector is facing new issues that should be dealt with promptly. The textile industry breaking under high energy prices struck up refunds and tight monetary policy is facing high competition from Thailand, Bangladesh, Vietnam, Wales, India, and other countries in the foreign market. Therefore, the government should take serious actions to safeguard the local industry which is the largest international trade earner.

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