Textile Industry

Compiled By: Mirza Rohail B

Historically, Pakistan’s textile industry and clothing sector has always been a major contributor to the foreign exchange  earner and still contributes about 55% to the total export proceeds.

textile-to-exports1

The Economist reports that Pakistan is the 4th largest producer of cotton in the world and the 6th largest importer of raw cotton, the 3rd largest consumer of cotton, and the 1st largest exporter of cotton yarn. Over 1.3 million farmers, out of total of 5 million are involved in cultivation of this crop.

Textile exports in 1999 were $5.2 billion and rose to become $10.5 billion by 2007. Textile exports managed to increase at a very decent growth of 16% in 2006. In the period July 2007 – June 2008, textile exports were US$ 10.62 Billion.  Textile exports share in total export of Pakistan has declined from 67% in 1997 to 55% in 2008, as exports of other non-textile sectors grew.

UN reports 102 countries import textile and apparel products and 104 countries export these products. Global trade in textile and apparel products account for an approximately $440 billion. Pakistan is bogged down in the 5% textile requirement of the world, by dedicating 62% of its GDP share for textile. An anti-dumping of 5.8% has been imposed by the European Union, which has put Pakistan in a desperate position to match competitiveness posed by Bangladesh, India, China, Sri-Lanka and Vietnam.

The top buyers of Pakistani textile goods are: USA, EU, Gulf region, UK, Hong Kong, Japan, Korea, Saudi Arabia, Italy, Turkey, Germany, Norway, France, Canada, Sweden, Australia, etc.

Government vision 2005-2010

To overcome global competition, the Pakistani government in 2006 approved a “Technology-based Industrial vision and strategy for socio-economic” which called for technology up-gradation, human resource development, and establishment of a fully integrated chemical industry in the country.

Investment Policy & Incentives for Vision 2005-2010:

·         Whole of textile sector is included in list of value added industries.

·         5% custom duty on imported machinery if not manufactured locally.

·         Tax relief: Initial Depreciation allowance (IDA) at 50% of machinery & equipment cost.

Export plan 2006-13 seeks to increase textile and garment’s sector exports to $24.36 billion.

There is a need to engage young qualified generation as roving ambassadors of marketing caliber, diplomacy and professional approach. Pakistan commerce intelligence may chalk out plans to reach every region bloc with in-depth study of regional trade bloc.

2009-10 Performance

 textile21The share of textile exports in total exports of the country shrunk to 55 percent so far in the current financial year from well above 60 percent in the past years.

As the overall export volume remained stagnant in the first seven months of the current financial year, the shrinking share of textile goods in exports has been adversely impacting the export sector. During July-January 2009-10, total exports came to $10.870 billion as against $10.820 billion in the corresponding period of last year. In the months under review, textile export proceeds totalled to $5.981 billion over $5.849 billion in the same months of previous year.

2008-09 Performance

According to data by Federal Bureau of Statistics, Textile exports during the first eight months of current financial registered negative growth of 5.6% as against the exports recorded corresponding period of the last financial year. Exports during July-February (2008-09) totaled $ 6.47 billion against the exports of $6.85 billion recorded during July-February (2007-08). [Link]

During the time under review, the highest negative growth of 51.24 percent was recorded in the exports of yarn (other than cotton yarn) while exports of art, silk and synthetic textile were decreased by 23.45 percent.

Similarly, exports of cotton yarn declined by 15.28 percent, cotton (carded or combed) by 13.81 percent, knitwear by 2.66 percent, bed wear by 10.44 percent, tents, canvas and tarpaulin by 21.18 percent, readymade garments by 12.43 percent, made up articles by 0.3 percent while the exports of other textile materials declined by 15.28 percent during the period.

However, the exports of raw cotton witnessed increase of 154.5 percent during the time under review while exports of cotton cloth increase by 5.57 percent and towels by 10.02 percent.

 
Textile Machinery Imports

According to official statistics released by Federal Bureau of Statistics (FBS), country’s total textile machinery imports  textile-machinerydeclined to $438.270 million during the last fiscal year of 2008, over the import of $502.898 million in fiscal year 2007, depicting a decrease of $64.6 million in the fiscal year 2008. [Link]

 

Imports of textile machinery in the month of June 2008 alone also indicated a decline of 22 percent, as compared to the month June 2007. In June 2008, the industrialists and textile manufacturers have imported textile machinery worth $32.101 million as compared to $41.07 million during the corresponding period fiscal year 2007, which depicted a decrease of $9 million only in June 2008.
 
 
 
Industry – Spindles, Rotors and Looms  gul-ahmed-textile 

In 1999-00: Units 443 and Spindles 8,477,000 and Rotors 149,780 and Looms 9944.

In 2003-04: Units 456 and Spindles 9,590,000 and Rotors 146,640 and Looms 10,646.

In 2005-06: Units 461 and Spindles 10,437,000 and Rotors 155,104 and Looms 8747.

In 2006-07: Mills 567 and Spindles 11,809,000 and Rotors —– and Looms 9000.

The least developed sector is weaving which mostly comprises of smaller, fragmented and inefficient units. These units are called inefficient as they mostly use power looms, which are capable of producing narrower width fabric s and mostly use coarse counts of yarn. Therefore, the quality is much inferior to fabrics produced on shuttle-less looms. For decades, the government continued to charge import duty at fabulous rates on shuttle-less looms. Income from power looms was tax exempt but income of units using shuttle-less looms was taxable.

The knitwear segment of Pakistan has always focused on achieving higher volume rather than concentrating on quality, price and terms of delivery.

A spinning unit of 14,400 spindles employs around 100 persons.  

 

Global financial crisis

As the economies in the US and Europe slow down, Pakistan’s key exports of textiles and leather products are experiencing a slowdown in growth as well. According to APTMA, textile exports have declined by about 20 percent in 2008. The industry is bracing for more trouble ahead with continuing crises of electricity and gas, international market access, global economic slow-down, and adverse travel advisories.

Pakistan’s share of the US textile market is dropping. China tops the US market with a share of 36 per cent followed by Bangladesh 21 per cent, India 18 per cent, Morocco 19 per cent and Pakistan 13 per cent. South Korea has lost 20 per cent of the US market.

In the European market, China tops again with a share of 29 per cent, Vietnam 28 per cent, India 19 per cent and Pakistan only 1.5 per cent while the Philippines had lost 11 per cent of the market.
 
WestPoint Stevens and Dan River were two American companies which were negotiating a $200 million deal with a Karachi-based textile group in Karachi. It has been put on halt.

 

Setbacks for Pakistan Textile Industry

·         Recently, the government has also abolished research and development (RandD) support program for the textile sector from July 1 2008. [Link]

·         The Pakistani government had recently proposed to implement 18 percent Value Added Tax (VAT) on the textile sector in the upcoming budget. [Link]

·         Decline in the machinery imports, is also due to the enhanced interest rates on loans, which have not been decreased by the new State Bank governor.

  • Recent substantial hike in gas tariff also hurt the growth of the textile industry.

 

        

Dye Process

Dye Process

 

Textile Value Chain
Textile Value Chain

Newspaper Updates 

 

  Pakistan’s total exports: Share of textile exports shrinks to 55% from 60%

4 Mar 2010: The share of textile exports in total exports of the country shrunk to 55 percent so far in the current financial year from well above 60 percent in the past years.

As the overall export volume remained stagnant in the first seven months of the current financial year, the shrinking share of textile goods in exports has been adversely impacting the export sector. During July-January 2009-10, total exports came to $10.870 billion as against $10.820 billion in the corresponding period of last year. In the months under review, textile export proceeds totalled to $5.981 billion over $5.849 billion in the same months of previous year.

Government claims to diversify the export base by focusing on the sectors other than the traditional ones, however the figures available on the exports tell a different story. “No new product or new market has significantly contributed to the exports and it is the same old and traditional items that have been making the total export volume,” according to textile exporters.

Textile products remained the mainstay of the country’s export sector over the years and being the largest industrial and export-oriented sector, it caters to the employment of a major part of industrial labour of the country.

Textile exporters said that the most worrisome factor is the stagnant export of textile goods and whatever is being exported in this category largely comprises of raw cotton, cotton yarn and low valued textile goods.

The value-added sector, they pointed out is under intense pressure due to a host of domestic and international issues, which have been making the country’s products uncompetitive in the foreign markets from its international competitors.

The prolonged power outage, gas shortage, high financing cost and infrastructure problems are some of the major issues, which have been hampering the growth of the value-added textile sector.

Also, the high tariffs on the textile goods in EU and US markets have given leverage to its competitors like Bangladesh and Vietnam to kick out Pakistani products from these lucrative and high-priced markets.

“It will be a wishful thinking to increase the export of value-added sector in the present situation when even raw materials are not available in adequate quantity to run the industrial units in this sector,” a value-added textile exporter felt.

He noted that revival of textile sector is not possible without the growth in value-added sector because it is the one, which would fetch better prices of cotton instead of raw cotton and cotton yarn, which is presently being exported in huge quantity.

“The share of textile products in the total exports could only be achieved through focus on the value-added textile chain and if remedial steps are taken, the textile’s share jumping to 60 percent is not a hard target to achieve,” he added

 ’70 percent of spinning mills left with stock for 15 days’

LAHORE (March 05 2010): Majority of the spinning mills are left with 15 days cotton stock, as the abysmal condition of the sector arising out from the myopic policies of the textile ministry has set to leave 3 million spinning industry labourers as jobless by April.

Gohar Ejaz, Chairman All Pakistan Textile Mills Association (Aptma) told Business Recorder that 70 percent of the spinning mills are carrying only 15 days cotton stock due to the abnormally high cotton prices internationally and anti-industry policies of the textile ministries locally.

According to him, the hasty decision of the textile ministry of restricting exports of cotton yarn is soon going to result into closure of many spinning mills in the country as these spinning mills can not provide subsidised yarn to the local apparel sector.

It may be noted that the textile ministry has further tightened quantitative restrictions on export of yarn at 35,000 tones per month from 50,000 tones, effective from March 01 to June 30, 2010. This decision of the textile ministry has gathered dismay on the part of the spinners and they have criticised the Ministry of Textile’s failure to play a non-partisan & balanced part in the decision making.

Interestingly, the latest exports figures suggest the exports of all sub-sectors of textile industry have increased impressively in January 2010 comparing with December 2009, barring the exports of raw cotton and cotton yarn that have declined by 31.27 percent and 19.18 percent respectively.

The exports of yarn other than cotton yarn (17.08 percent), cotton cloth (8.50 percent), knit-wear (13.56 percent), bed wear (10.66 percent), towel (61.63 percent), tents, canvas & tarpaulins (1.89), readymade garments (25.25 percent) and art, silk & synthetic textile (7.12 percent) are on the rise in January 2010 comparing with December 2009.

Gohar said the latest figures suggest that the apparel sector’s hue and cry is entirely baseless. According to him, the spinning mills are failing in meeting with their foreign buyers’ commitments and the foreign customers have threatened to claim damages due to loss of production if they do not receive yarn well in time.

Chairman Aptma said Pakistan’s spinning industry is being viewed as unreliable supplier and the foreign customers are planning to move away forever. Similarly, the annual production plans of spinning mills, followed by purchase of machinery and raw materials are likely to incur heavy losses due to the imposition of export quota, he added.

Furthermore, he said, a sheer negation of the Free Market Mechanism may make huge investments by spinners as redundant and the volume of Non Performing Loans is likely to increase manifold. A good number of spinning mills have consumed inventories of cotton and are buying/importing cotton on existing escalating price trends.

He said the imposition of quota would force the closure of at least 100 mills in the first instance as the mills would be unable to sustain provision of cheap yarn to a few opportunists in the value added sector by importing costlier cotton themselves.

Chairman Aptma urged the government to lift the ban on exports of quota immediately in the larger interest of the industry and country’s exports. The textile industry should not be deprived of the right of free market mechanism by the pressure exerted by the apparel sector in any case, he added.

Textile exports decline sharply

April 18, 2009: Textile exports are not generating enough revenue for millers, causing an alarming decline in exports both in terms of value and quantity since exports peaked in 2006-07.

Data collected from different textile associations by The News revealed that the fall in exports is across the board in all sub-sectors of textile, from yarn and fabric to clothing, bedwear, towels and tents and canvas, both in quantity and value. The decline in terms of quantity ranges from 10.30 per cent in towels to 42.71 per cent in readymade garments.

The decline in quantity, according to industry experts, is due to a drop in productivity and availability of surplus capacities. They say this is also indicative of the number of jobs that have been lost in the textile sector since 2006-07.

It has been found that average monthly yarn sales in 2006-07 were 55,460 kg while yarn exports from September 2008 to February 2009 varied between 38,738 kg and 43,464 kg. On average, exports in quantity terms declined by 21.63 per cent since attaining their peak two years ago. Many spinning units have closed down due to the decline in yarn purchase.

The decline is not restricted to quantity only, per unit prices of yarn have dropped appreciably during the current fiscal year. In value terms, Pakistan exported 43,054 kg of yarn for $102.66 million while in February 2009 43,464 kg of yarn fetched only $78.151 million, indicating a fall of 24 per cent.

In case of fabric, the situation is worse. In 2006-07, Pakistan exported an average of 184,320 square metres of cotton cloth. However, it exported 188,875 square yards of fabric in September 2008, 165,934 square yards in October 2008, 166,545 square yards in November 2008, 132,868 square yards in December 2008, 122,650 square yards in January 2009 and 108,635 square yards in February 2009. There has been a constant decline in fabric exports even during this fiscal.

Average monthly fall in fabric exports in terms of quantity since the reference year of 2006-07 comes to 41.06 per cent.

In value terms, the decline in fabric exports since September 2008 is 37 per cent. In September 2008, Pakistan fetched $183.576 million from fabric exports that were reduced to $116.226 million in February 2009. The huge decline in quantity means that large number of lay offs and reduced value has definitely impacted the viability of weaving mills.

Knitwear industry resisted bravely against export pressures, but has caved in since January 2009. In the year 2006-07, average monthly knitwear exports were 7852000 dozen. The knitwear exports were 9942000 dozen n September 2008, 8738000 dozen in October 2008, 9037000 dozen in November 2008, 6525000 dozen in December 2008, 6899000 dozen in January 2009 and 5617000 dozen in February 2009. The decline since 2006-07 is 28.46 per cent in quantity terms but the decline since September 2008 is more than 42 per cent.

The decline of knitwear exports in quantity terms is reflected from the closure of over 40 per cent of the knitwear industry, including some big state-of-the-art units. In value terms, knitwear exports have declined by 34 per cent since September 2008.

Readymade garments have recovered the loss from the 42.71 per cent drop in exports in quantity terms since 2006-07 by increasing per unit value of exports. But reduction in quantity certainly means pruning of a large number of employees. In value terms, exports of the readymade garment industry declined by only 3 per cent since September 2008.

In September 2008, readymade garments fetched 99.952 million on the export of 3704000 dozen garments. In February 2008, exports worth $96.692 million came from the export of only 2122000 dozen garments.

Average monthly towel exports declined by 34 per cent in quantity terms since 2007-06, tents and canvas exports reduced by 29 per cent and art silk and synthetic textile exports by 58 per cent.

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21 Comments

Filed under Pakistan Economy, Textile

21 responses to “Textile Industry

  1. Administrator

    “Textile exports decline sharply “

    April 18, 2009: LAHORE: Textile exports are not generating enough revenue for millers, causing an alarming decline in exports both in terms of value and quantity since exports peaked in 2006-07.

    Data collected from different textile associations by The News revealed that the fall in exports is across the board in all sub-sectors of textile, from yarn and fabric to clothing, bedwear, towels and tents and canvas, both in quantity and value.

    http://thenews.jang.com.pk/daily_detail.asp?id=172980

  2. Administrator

    Non-textile exports continue to post growth

    KARACHI: The handsome growth in non-textile exports helped to avert the major loss in the overall export volume caused by dismal show of textile products. The export of non-textile products posted 10 percent growth to $6.220 billion in first nine months of current financial year over $5.648 billion in the corresponding period of previous year.

    Whereas textile exports registered 7.58 percent negative growth to $7.193 billion in the period under review against $7.783 billion in the same period of last financial year.

    http://www.dailytimes.com.pk/default.asp?page=20094\23\story_23-4-2009_pg5_8

  3. The industry is bracing for more trouble ahead with continuing crises of electricity and gas, international market access, global economic slow-down, and adverse travel advisories. Thank you.

  4. fatima

    i would like to know the detailed values of textile exports upon which the graph has been formed

  5. anonymous

    I want to knw what logistics procedure pakistan follows when it has to export cotton to china….
    The mode and period of transportation , insurance, period of payment, and inco terms if applicable..

  6. Murtaza

    Looking for fresh facts and figures regarding spinning industry esp.

  7. Hussain

    Hi,Me Hussain I Want To Know All The Procedure Of About Silks Mills And Also I Wanna to Publised My Own Silks Industry So Delivered Me All The Details\ Mean To How U Handled And to How Export The Cotton Clothes To Forigen Countries. The Mode And Period Of Transportation , Insurace, Period Of Payment, And Income Details If Aplicable..

  8. Ruqia noureen

    textile industry is declining due to power failure and the export of yarn.governmentr shouild impose VAT on yarn exports .

  9. Farrukh S. Rajput

    Please provide me the latest facts & figures regarding the textile industry of Paksitan.
    Thanks.

  10. Administrator

    Dear Farrukh S.Rajput,
    We have put up the latest figures. For your additional ease, providing here. Thank you and Regards!

    4 Mar 2010: The share of textile exports in total exports of the country shrunk to 55 percent so far in the current financial year from well above 60 percent in the past years.

    As the overall export volume remained stagnant in the first seven months of the current financial year, the shrinking share of textile goods in exports has been adversely impacting the export sector. During July-January 2009-10, total exports came to $10.870 billion as against $10.820 billion in the corresponding period of last year. In the months under review, textile export proceeds totalled to $5.981 billion over $5.849 billion in the same months of previous year.

    http://www.dailytimes.com.pk/default.asp?page=201034\story_4-3-2010_pg5_8

  11. M Noman

    no doubt that power crisis is a serious issue but industries have managed to over come this difficulty by installing power generators. the major factors toward the declining is the incorrect policy making. The government should stop exporting of yarn .

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  14. Amber Munir

    AoA
    No doubt the information provided here are quite helpful but can you tell me how can I get specific facts and figures regarding top 3 textile mills’ market share and other relevent information of fluctuating market share in previous years for my research project.

  15. Sikandar Ali

    Please provide me the latest facts & figures regarding the textile industry of Pakistan.
    Thanks.

  16. Hussain

    Please provide me the latest facts & figures regarding the textile industry of Pakistan.

    Regards

  17. khadim hussain student of applied economics research center university of karachi

    I am going to estimate export demand function of pakistan textile industry,without your coopration it will take a long peroid of time do so ,i m therefore request to you all please share your knowledge with me.thanks

  18. nawaz ahmad

    i want the data of textile and clothing products on following.
    Import and export.
    unit prices of import and export for textile seprately and clothing products seprately.
    total production of textile and clothing sector.
    total labor
    i need yearly data

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  21. I m student of MBA In Hamdard university Karachi
    Please provide me the latest facts & figures regarding the declining of garment export in Pakistan 2008 to 2013 .
    fkhan75@hotmail.com

    Regards
    M>Faisal Khan

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