Industry Analysis

Being the fourth largest producer of cotton, the textile industry in Pakistan consists of a large scale organized sector as well as fragmented medium and small units. Textile exports contribution towards the countrys total exports estimated to be about 50% in FY12 (Economic Survey of Pakistan, 2011-2012). During FY10, Pakistans textile and clothing exports contributed towards 2% of the world trade (Economic Survey of Pakistan, 2011-2012). Besides contributing towards the exports segment, the sector is a major employment generating avenue as it provides employment to 38% of the manufacturing labor force (Khanzada, 2012). Today Pakistan's textile processes include cotton spinning (yarn), cotton weaving (cloth), cotton fabric, fabric processing, home textiles, towels, hosiery and knitwear and readymade garments. These are manufactured both in the large scale organized sector as well as in unorganized cottage / small & medium units (Khanzada, 2012). At the time of partition, Pakistan only received 90 cotton mills out of 389 mills. Most of these were located in Multan, Faisalabad, Okara, and adjoining areas. The Open General Licensing Scheme in the 1950s allowed for the establishment of Gul Ahmed Textiles, Kohinoor, Nishat and Crescent Textile, and some others (Khanzada, 2012). Today Pakistan has 521 textile units with installed capacity of 10.9 million spindles (All Pakistan Textile Mills Association). Keeping in mind the importance of this sector in terms of its contribution towards the national economy as well as the diversification it has to offer in terms of the processes within the industry, it is deemed important to examine the kind of governance system prevailing in the industry. The Ministry of Textile Industry was established by the Government of Pakistan (GoP) in September 2004 and Mr. Mushtaq Ali Cheema was handed over the responsibility of being the first Federal Minister for the textile industry (Khanzada, 2012). A Textile Policy 2009-2014 was also set up and in accordance to Rana Farooq, Minister for Textiles Industry, the initiatives under this policy were Textiles Investment Support Fund, Technology Up-gradation Fund, Infrastructure Development, Rationalization of Tariff Structure, Removing Regulatory Bottlenecks, etc (Khan, 2009). The textile sector faces numerous challenges. It is doing pretty well in the low value added sector but fails to tackle competition from China, India and Bangladesh in the regional markets that are focused on high value added goods (Khanzada, 2012). Owing to the energy crisis in the country, the sector has been facing loses of up to 30% in the production arena. Furthermore, growth rate

has been about 2% in the last three years as compared to last decades when it was above 9% annually. Moreover, devaluation of Pakistani Rupee and high interest rates are causing a raise in production costs (Sohail, 2012). Pakistan's textile industry lacks adequate infrastructure, modern machinery and technology, research and development capabilities, and skilled manpower. Political instability and internal security also remain a concern (Thomasson, 2012). A major player within the textile sector of Pakistan is Portia Fabrics, part of the Saleem Brothers Group. This group began its journey in 1970 with a small retail outlet and today is one of the largest retail networks in the country. It diversified in 2004 by entering into art printing and opening up the processing facility known as Saleem Brothers Textile Mills (Portia Fabrics).