Project For Textile & Apparel Ind. Future Challenges in Pakistan.

Textile & Apparel Industry, Evaluation & Future Challenges in Pakistan
INSTITUTE OF BUSINESS AND TECHNOLOGY
Prepared By
Muhammad Tauqeer Ahmad Course Code : MKT- 606
MBA (Marketing) FACULTY OF MANAGEMENT AND SOCIAL SCIENCES
December 2008
Institute Of Business & Technology
INSTITUTE OF BUSINESS AND TECHNOLOGY

ABSTRACT SUBMITTED BY: DISCIPLINE: TITLE OF PROJECT REPORT: Muhammad Tauqeer Ahmad MBA (Marketing) Textile & Apparel Industry, Evaluation & Future Challenges in Pakistan MONTH OF SUBMISSION: December 2008
NAME OF PROJECT SUPERVISOR:
ABSTRACT
Textile industry has been the bulwark of Pakistan's economy. It contributes more than 60% to the total export earnings of the country, accounts for 46% of the total manufacturing and provides employment to 38% of the manufacturing labor force. The availability of basic raw material for textile industry, cotton, has played a principal role in the growth of the industry. Although the growth in the textile & apparel sector has been declining after WTO and currently some other factors, which well discuss in detail subsequently. The current scenario posses challenges firstly to sustain its global positioning and secondly to increase its market share by both increase in volume as well as increase in unit values but its depend upon peacefully & economical environment and institution supports. The improvement in quality, market tie-up, image building and change in business philosophy can be improved with new strategy plan by Govt. and Industrial support. This requires up gradation in resource development both in manufacturing and marketing. The focus should be on R & D, technical innovation, product development on one hand and brand & market development.
Institute Of Business & Technology 2
ACKNOLEDGEMENT
First of all I would like to thanks to ALMIGHTY ALLAH, Lord of our lives and of everything in the universe and His Holy Prophet MOHAMMAD (P.B.U.H.), whose blessings enable me to perceive and pursue higher ideas to making this report possible. It was a laborious task for me and I couldnt have accomplished this without the help and support of many peoples. I would like to thanks our Respected Faculty Mr. Dr. Noor Ahmed Memon, Who gave me lot of guidance and advises in preparing this report possible. I would also thanks to unique contribution of some capital mind from various organization such as Gul Ahmed Textile Mills , King Apparel , Grace Knitwear, IBC etc. which supported me to highlighted the challenges and give an abstract ideas to how can develop our industry which going to be declining position day by day. Especial thanks to following, whose support and feedback was quite crucial and without which we would not have been able to conduct the survey nor compile this report:

Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr.
Finance Manager Director Marketing Manager Operation Manager H.R. Manager Production Executive Executive Director Finance & Import / Export Manager Merchandising / Marketing Manager Development Manager Finance & Import Manager Accounts Manager
I deeply grateful thanks to the staff of different industries that unconditionally participated in this report and took out time to patiently respond to different queries of my survey efforts.
I hope that this report meets the criteria, which I asked to adhere to.
CONTENTS
ACKNOWLEDGEMENT ABSTRACT Chapter:
1.1 1.2 1.3 1.4
INTRODUCTION
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07 09 09 11
Introduction Purpose of Study Research Objectives Research Methodology
Chapter:
2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8
TEXTILE INDUSTRY IN PAKISTAN
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13 16 20 24 28 33 35 35
History of Textile Industry in Pakistan Cotton Ginning Spinning Yarn Cloth Made-Up Textiles Hosiery & Readymade Garments
Chapter:
3.1 3.2 3.3 3.4
EXPORT PERFORMANCE
37
38 39 58 65
Over view Export of Textile Manufactures Problems Role of the textile industry in national economy
Chapter:
4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9
WEAKNESS OF GLOBAL TEXTILE
66
67 67 68 68 68 69 69 69 70
Global Challenges, over view Pakistan India China Bangladesh Vietnam Thailand Sri Lanka Indonesia
Chapter:
5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 5.10
FUTURE CHALLENGES
71
72 72 75 82 85 90 104 110 113 121
Introduction Power Energy Crisis Water Crisis Quality Development Modern Trends for the Apparel Sector Emerging Challenges in Cotton Farming in Pakistan Compliances Issues H.R. Development Post Quota Challenges E-Commerce in T & A Industries
Chapter:
6.1 6.2
CONCLUSION & RECOMMENDATIONS

130 131
Conclusion Recommendations
BIBLIOGRAPHY
142
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Chapter 1: INTRODUCTION
Introduction
1.1
1.2
Purpose of Study
1.3
Research Objectives
1.4
Research Methodology
1 - INTRODUCTION
1.1 Introduction
T he textile & apparel industry of Pakistan is going towards a difficult stage

according to the elimination of quota system in 2005. Two years has been passed away and our industry invested heavily in the previous four years to meet the apparent global challenges faced mainly from China, India and other Asian countries, who have been establishing a solid base in value added textile sectors in the last few years. Despite investing more than $5.5 billion in up-todate textile technology our textile industry is feeling the crunch of the global competition. Let us examine where the crux of the problem lies and how our industry can expect to successfully pull out of the extremely difficult scenario. The traditional spinning and weaving sectors are surviving with their exports growing. They basically provide the raw material for the value added global textile sector. The spinners and weavers who are complaining are those who chose to remain in the commodity of 20 count yarn business and basic fabrics. On the other hand, the progressive spinning mills, who invested in value added yarns like mlange yarn or compact yarn, are reaping the benefits of the appropriate investments they have made. On the whole, the spinning sectors is running at full capacity and have to import about 2 million cotton bales every year to meet the demand of yarn. The value added sectors of knitwear, woven apparel and even home textiles, however, are not faring so well. Particularly the knitwear sector is severely affected by low priced, high quality products from China, Bangladesh, India and even countries like Vietnam and Cambodia. The knitwear sector exports amounted to $1.75 billion during 2005-2006 which is 12% of the total export earning from Pakistan. This is by far one of the important sub sectors of our textile industry that was until a few years ago thriving and investing in the most modern units with the latest machinery and technology. Sadly, quite a number of units have stopped their production because of intense competition from
other countries like India and Bangladesh. Pakistans knitwear industry exported low price mass market products to department stores in the US and Europe. Their business is highly dependent on the centralized buying houses. One of the recent phenomenons has been the opening of the regional offices of the department stores like Walmart in India and other countries. Indian manufacturers have a natural advantage because of the presence of these buying houses in India.
While there is still no dearth of export orders but the prices offered are not feasible for Pakistani manufacturers due to high unit cost of production resulting from higher labor cost, higher utility costs and also higher financial costs as compared with India, China and Bangladesh. The Chinese government gives very high export rebates to their manufacturers. In India the financial cost is lower than in Pakistan and very attractive terms are available for new capital investment. The knitwear units in Pakistan, that were heavily leveraged, could not sustain the escalation in the cost of production. The woven apparel is faring relatively better, particularly the denim sub sector. The manufacturers in this field, like Artistic Denim, are progressive companies who have made correct decisions at the right time. However, several denim plants are in the pipeline in Bangladesh at present. This is a moment of concern for Pakistan. Our manufacturers in the knitting sector cannot meet the lower labor cost, lower utility rates and also lower import duties in the key markets where Pakistan competes with Bangladesh. Are our denim garment producers ready to meet Bangladesh as a viable competition in the near future? There is a severe shortage of qualified professionals in the apparel and knit sectors. Our trained professionals are going to Bangladesh and Russia to run their factories. Furthermore, the quality professionals from Srilanka are not available for our industry as in the past, because Srilankas apparel industry can no longer spare its highly qualified and skillful professionals. Pakistans textile industry for long had relied on quotas and rebates, resulting in a severely handicapped outlook. The marketing was deficient as the manufacturers were guaranteed a certain market share due to quotas. The
margins were high and comfortable. Our exporters did not invest enough in developing brands and producing unique high quality textile goods that could have fetched much higher returns. Although our exports have shown an increase over the years, the unit costs of our exports have declined significantly, reflecting lower margins and a highly competitive global environment. Those manufacturers, who produce goods with high value addition, are up-to-date with the latest trends and fashions and who manage to carve a niche for themselves in the cut throat competitive world of today will be the ones to survive in the coming years.
1.2 Purpose of the Study

This study assesses the past and current situation of Pakistan textile & apparel industry which is the largest foreign exchange earner having 60% export share but its struggling hard since the last fiscal year to compete in the international markets. Further more industry also disappointed from the current trade policy which they squeeze the incentive for the sector. So describing some selected challenges e.g. energy crisis, cotton farming, cotton price, WTO impact etc. & position of the industry which is not in good position so we need to be evaluate the real picture of the industry. I have tried my best to prepare the report in such a way so that it could cover all the facets and figures to evaluate that what would be done and how can improve our level and enhance our industry structure to enhance our export on a profitable way.
1.3 Research Objective

Pakistan is one of the leading textile manufacturers in the world. However, our value-added sectors, particularly apparel and knitted clothing have a very small share in the world trade. Despite efforts to bring in diversification in country's overall economic get-up the textile sector continues to be the most important segment of the national economy. Its share in the economy, in terms of GDP, exports, employment, foreign exchange earnings, investment and revenue generation altogether
placed the textile industry as the single largest determinant of the economic growth of the country. The Apparel sector of textile Industry is one of the fastest growing areas of our economy and has great socio-economic significance. The Apparel Industry long the mainstay of Pakistan's economy stands at the cross roads. A combination of factors ranging from high raw material prices to increasing competition in the global market place is forcing both, our industrialists and our planners, to place greater emphasis on increasing productivity and enhancing quality. Both aspects need a significant rise in the number of trained personnel.
The objective of this my research to indicate the some viewed challenges and would like to show the real image of the textile & apparel industry in Pakistan. Our concerns relate to the future, towards our effort to retain our position as a leading textile producer and to get greater market share in the coming years. We have concerns over our ability to continue with the present rate of growth as long as the region does not provide an even playing field. To assesses the overall industry structure's performance To get the maximum market share either in nation & international To Enhancing competitiveness, productivity Described the current position of the textile industry in Pakistan to evaluate the situation and with the statement of this facts and figures what could be better strategy to grow our industrial growth. Meet the challenges posed by WTO Regulations Boost Pakistans exports and foreign exchange earnings In the improvement of the industry employment opportunities would be boosted To compare with global industries weakness that what the real facts to decrease / increase our productivity growth. To identify the challenges of the Textile & Apparel industry now and onward that we can evaluate our industry structure. My objective to identify the some real facts & figures of the textile and apparel industry just because of to analyzing the situation of the industry and in the light
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of this report how can possible to get the maximum market share whilst our industry face a large numbers of barriers to get maximize growth.
1.3 Research Methodology,

The following steps were taken to execute the study: A comprehensive study & research to get the maximum data from various industrial units. The study was conducted with seniors capital mind of the industry with in given time schedule from the institute. This report covered a large facts and figures to show the industry performance and position from past to last year. To insure that provided data would be correct so get it from authentic sources such as personally meet with D. Commissioner of Textile industry. Personally conducted some interviews with managers and directors to get their views and news from past to now. Secondary data was also reviewed from collecting information As per my experience in this industry as a Senior Merchandiser it could be possible to add some more stuff and verify the exact situation of the industry.
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Chapter 2: TEXTILE INDUSTRY IN PAKISTAN
2.1
History of Textile Industry in Pakistan
2.2
Cotton
2.3
Ginning
2.4
Spinning
2.5
Yarn
2.6
Cloth
2.7
Made-Up Textiles
2.8
Hosiery & Readymade Garments
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2. TEXTILE INDUSTRY IN PAKISTAN

2.1 History of Textile & Apparel Industry of Pakistan, 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 60-70% 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. 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
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Iran. The latest available date on overall export performance of Pakistan comported with some regional countries is given in table 1: The abovementioned 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. During the period 1973 to December 1992, some 71 spinning units with 1,136, 835 spindles, 6,600 rotors ands 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. 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 sectarian recommendations, hence the sectarian 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.
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Apparel manufacture is an important value-added sector of the textile industry of Pakistan. This sector manufactures and exports ready-made garments, woven as well as knitted, of all types such as trousers, ladies suits, jeans, Children garments, maxis, blouses, skirts etc. There are 12,000 knitting machines, which spreads all over the country. The capacity utilization is approx 70 percent. Besides locally manufactured machinery, liberal import of machinery under different modes is also being made and the capacity based on exports is being developed. This sector has tremendous export potential. However, the sub-sector remained under pressure from its competitors during the year under review and recorded a decline of 8.0 percent in exports as against last year amid tough competition emerging from the newly-inducted members to the European Union (EU) belonging to the former East European bloc.
Exports from ready-made garments and knitwear sectors crossed $1.0 billion mark each for the first time in the history of Pakistan in 2002-03, contributing about 30.27% to total textile and clothing exports and 52.78% to total valueadded exports. The jump in apparel (readymade garments and knitwear) exports from $ 1,723 million in 2001-02 to $2.24 billion in 2002-03 was mainly due to the concessions allowed by the E.U, mainly increase of quota by 15% with effect from 01.12.2001 and abolition of import duty with effect from 2002. However, with effect from March 2004, the E.U. re-imposed import duty @ 12%. Currently, textile and clothing exports from Pakistan to E.U. are subject to an import duty of 9.6% because these are more than 1% of the E.U. market for textile and clothing. Consequently, these exports being ineligible for GSP concessions have remained almost stagnant in 2003-04 and 2004-05 at about $2.47 and $2.74 billion. In fact, textile and clothing exports from Pakistan are under severe strain after the commencement of WTO, the World Trade Organization, with effect from 01.01.2005. In contrast, Bangladesh and SriLanka enjoy better access to the E.U. market. The textile and clothing exports from these countries are subject to Zero and 50% of import duty respectively as compared to Pakistans textile and clothing exports.
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2.2 Cotton, Cotton is a natural vegetable fiber used primarily as a raw material for cloth. Cotton's strength, absorbency, and capacity to be washed and dyed also make it adaptable to a considerable variety of textile products. It grows best in tropical and warm subtropical latitudes. Leading producers include USA, China, India, Pakistan, Uzbekistan and Turkey. Small trees and shrubs of a genus belonging to the mallow family produce Cotton. The immature flower bud blossoms and
develops into an oval boll that splits open at maturity, revealing a mass of long white seed hairs, called lint, that cover a large number of seeds. When fully mature and dry, each of these hairs is a thin flattened tubular cell with a pronounced spiral twist and is attached to a seed. The length of the individual fibers ranges from 1.3 to 6 cm (0.5 to 2.5 in). Shorter fibers that grow from the seeds are called linters.
Cotton is the most used textile fiber in the world. Its current market share is 56 percent in all the fibers used for apparel and home furnishings. It is also widely used in non-woven textiles and personal care items. It is generally recognized that most consumers prefer cotton personal care items to those containing synthetic fibers.
World textile fiber consumption in 1998 was approximately 45 million tons. Of this cotton accounted for approximately 20 million tons. The earliest evidence of using cotton as a textile fiber comes from India around 3000 BC. There were excavations of cotton fabrics of comparable age in Southern America. Cotton cultivation first spread from India to Egypt, China and the South Pacific. The global rise in cotton production relates to invention of the saw-tooth cotton gin by Eli Whitney in 1793. With this new technology it was possible to produce more cotton fiber that stimulated new inventions in the spinning and weaving industry. Today, cotton is grown in more than 80 countries world-wide. Pakistans economy is mainly dependent on cotton and textile sector. It is, however, realized that under the WTO post - quota scenario a larger crop would pay the real dividends only when its quality matches the spinners demand at home and abroad. All the stakeholders are, therefore, being motivated to play their due role in transforming the cotton pricing and marketing system from subjective assessment to objective valuation of seed cotton and lint through adoption of cotton standardization and grading mechanism already developed and introduced by the government.
World cotton production is estimated at 118.8 million bales in 2007-08 - 3 percent lower than last world mill use is projected to increase further to 124.6
million bales thereby exceeding the production. Accordingly, the end stock is expected to decline.
Three Asian countries (China, India and Pakistan) are expected to produce more than half (59%) of the global cotton production in 2008-09. Similarly these three countries are also likely to account for about 68 percent of the world cotton consumption.
Production and Yield of Cotton,
Cotton Prices
Cotton prices this season in the country remained significantly higher than last year. The seed cotton prices during the season so far has averaged at Rs1,422 per 40 Kgs, as against last years average price of Rs1,171. In other words farmers received, on average, 21.4 percent higher prices this year. Similar trend was noticed in lint cotton prices. Cotton prices in the world market have also remained significantly higher than last year. It is important to note that the government had previously been fixing the seed cotton intervention price and entering the market through the Trading Corporation of Pakistan only when the seed cotton market price fell below the intervention price. Such a necessity was felt in 2004-05 when the government had to purchase 1.6 million bales. The growers had availed better prices in 2005-06 and 2006-07 seasons. For the current season (2007-08) the government did not fix any intervention price for seed cotton, but the market prices remained firm this year. Area, production and yield of cotton for the last five years are given in below Table,
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Cause of declining,
The cotton crop suffered for a variety of reasons including heavy rainfall in May 2007 causing poor germination in Punjab, high temperature during August and September 2007 causing more shedding of fruit parts and pest attack, especially dangerous mealy bug infestation. Consequently, cotton production declined to 11.7 million bales this year from 12.9 million bales last year thus registering a negative growth of 9.3 percent. The wheat crop was adversely affected by the shortage of irrigation water by 23.3 percent over normal
During the current fiscal year (2007-08), the availability of water for Kharif 2007 (for the crops such as rice, sugarcane and cotton) has been 5.5 percent more than the normal supplies and 12.2 percent more than last years Kharif (see
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above Table). The water availability during Rabi season (for major crop such as wheat), as on end-March 2008 was, however, estimated at 27.9 MAF, which was 23.4 percent less than the normal availability, and 10.5 percent less than last years Rabi, adversely affecting the wheat crop, production of which has decreased by 6.6 percent over the last year.
2.3 GINNING, Ginning is the process for separating lint from seed cotton. Lint is the term used for fiber after the seed has been removed at the gin. Historically the lint was removed from the seed by hand. Eli Whitney invented the sawgin in 1793, which was a collection of circular blades installed on a central shaft. McArthy invented the first roller gin in 1840, which consisted of single or double rollers covered with rough leather used to separate lint against a set of dull knives.
The ginning industry has mushroomed in the cotton growing areas of Pakistan informally, without adequate regulation. Cotton Control Acts of Punjab and Sindh from the 40s era have been continuing without consequential amendments and desperately need to be updated. Most of the industry is in the hands of local traders who have upgraded their enterprise from mandi commission agent operations or cotton intermediary trading by installing sawgins. There are a few old, ginning families in Sindh and Punjab whose next Generations have continued with the industry. By the nature of ginning activity, as explained earlier, it is more entrepreneurial trading than a processing activity, since the ginner has to play with the market risks of lint and cotton seed prices. The technology deployed is primitive (from the 40s), inefficient and based on local manufacturing in the hands of semi-literate mechanics. Even progressive ginners are handicapped in terms of access to technological progress. Pakistan is a major cotton producing country with good quality medium to medium long staple varieties. However, as in other sectors of the economy, its cotton sector suffers from a number of problems related to non-application of standards, ginning practices and poor management. There are 1,221 ginning factories in this country. The Cotton Belt is moving southward in the Punjab over a number of years, and is also coming up in the district of Nasirabad in the
Baluchistan province, where gin factories do not exist as yet. The annual cotton crop growing area is about 3 million hectares. The cotton crop matures first in the Sind and then gradually up the Punjab plains. Cotton has three pickings, where the first picking is considered the better yield pick. The third pick has the least fiber value and is used as waste or in quilts.
Basic units and measures used in Lint Cotton are: Cotton Lint Bale Size Bale weight 1 Maund of Phutti weighs 1Maund of Lint Cotton weighs Contamination: 18"x22"x44" 170 Kg 40 Kg 37.324 Kg Human hair, shreds of clothing,
cigarette butts, Jute fibers, animal hair, polyvinyl strips, toffee wrappers Ginning period per year 90 to 100 days.
Phutti required for 1 lot 100 bales: 1,300 mounds (52,000 Kg) of Seed Cotton (Phutti) (17,500 Kg) of Cotton Lint. Ginning capacity in Pakistan 302,000 bales per 24 hour day
Ginning Process in Pakistan (Seed Cotton Transportation and Storage),
Seed cotton to the ginning factory is mostly transported in boras (jute bags sewn with jute yarn) or on tractor trolleys fitted with frames wrapped in hessian cloth and polypropylene bags sown together to form a big cotton-holder. In this way more volume can be carried to the factory from the farm or wholesale market. Shreds of the white colored polypropylene and the jute thread (sayba) are sources of major contamination problem in the process of spinning and weaving. The seed cotton is not stored under covered sheds or proper storage facilities. It lays open in the gin factory's or wholesale market's yard and all the dust and trash gathers into it. Contamination such as toffee wrappers, polyvinyl bag pieces, dust from passing vehicles finds its way into it. Also overnight dew adds to the moisture content and causes deterioration of the color quality of cotton fiber that effects its dyeing and finishing characteristics. For these reasons, the Pakistani cotton quality image suffers and depreciates the international price being fetched.
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Most ginning factories buy seed cotton from the wholesalers (Aarhti) and lay it out to dry in the sun for 3 to 4 days. The ginning factory owners pay the Aarhti, once the rate for seed cotton has been agreed upon. The ginning factories also contract processing for big farmers or for Aarhtis who stock up on cotton lint. Ginning factory profits are linked to the Ginning Out Turn (G.O.T.) which is the percentage of lint in the seed cotton. A term called "Khoat" (trash content) is used to describe the discrepancy between the seed cotton purchased by the gin factory and the sum of weight of cotton lint and seed. Controlling the level of moisture in seed cotton is a major issue. Moisture content in excess of 10% causes serious problems and uses more electric power. Power consumption is a major cost factor during the ginning process. Picking cotton during early morning hours is a source of moisture, which is retained in the lint since cotton is highly hydroscopic in nature. High level of moisture results in weakening of the seed. The weakened seed breaks during the ginning process and its removal is not possible. A ginning factory basically consists of following three types of machines a) Pre-ginning machines b) Ginning machines c) Post-ginning machines
Number of ginning factories and machines
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**I would like to describe some more only about staple length which is most important factor for stability of the yarn,
Fiber Length
Fiber length is the average length of the longer one-half of the fibers (upper half mean length). It is reported in both l00ths and 32nds of an inch (see conversion chart below).
Fiber Length Table,
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2.4 SPINNING,
Spinning is the process of converting fibers into yarn. The fibers may be natural fibers such as cotton or manmade fibers such as polyester. Sometimes, term spinning is also used for production of manmade filament yarn (yarn that is not made from fibers). Whatsoever is the case, the final product of spinning is yarn. Cotton value chain starts from Ginning that adds value to it by separating cotton from seed and impurities, but Spinning can be called as the first process the chain that adds value to cotton by converting into a new product i.e. conversion
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from ginned cotton into cotton yarn. The importance of spinning cannot be overemphasized. Since spinning is in the beginning of value chain, so all the later value added processes of weaving, knitting, processing, garments and made-ups are dependent upon this process. If spinning industry produces substandard yarn, its effect goes right across the entire value chain.
INSTALLED CAPACITY BY PAKISTAN, INSTALLED CAPACITY (in 000) WORKING CAPACITY (in 000)
Period Units Spindles Growth% Rotors Growth% Looms Growth% Spindles Growth% Rotors Growth% Looms Growth%
1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 NA NA NA NA NA NA NA NA NA NA NA 78 137 182 225 499 649 1113 1449 1518 1568 1569 1581 1582 1586 1644 1850 1913 1967 2056 2043 2048 2175 2397 2605 2863 3266 3346 3366 3455 3546 3585 3729 3781 4033 4,229 4,313 4,272 0 75.64 32.85 23.63 121.78 30.06 4.76 3.29 0.06 0.76 0.06 0.25 3.66 12.53 3.41 2.82 4.52 -0.63 0.24 6.2 10.21 8.68 9.9 14.08 2.45 0.6 2.64 2.63 1.1 4.02 1.39 6.66 4.86 1.99 4.86 1.99 -0.99 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 5 4 14 16 19 23 27 29 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 150 -20 250 14.29 18.75 21.05 17.39 7.41 3 3 3 6 9 15 23 24 25 26 26 27 27 28 29 30 31 31 30 30 30 31 30 30 29 29 29 29 29 26 27 26 25 25 24 24 23 0 0 100 50 66.67 53.33 4.35 4.17 4 0 3.85 0 3.7 3.57 3.45 3.33 0 -3.23 0 0 3.33 -3.23 0 -3.33 0 0 0 0 -10.34 3.85 -3.7 -3.85 0 -4 0 -4.17 78 137 182 225 302 600 940 1355 1422 1447 1459 1488 1491 1531 1524 1810 1792 1852 1871 1888 1916 2090 2327 2491 2650 3057 3034 2823 2579 2650 2585 2645 2701 2833 2,832 2,986 2,919 75.64 32.85 23.63 34.22 98.68 56.67 44.15 4.94 1.76 0.83 1.99 0.2 2.68 -0.46 18.77 -0.99 3.35 1.03 0.91 1.48 9.08 11.34 7.05 6.38 15.36 -0.75 -6.95 -8.64 2.75 -2.45 2.32 2.12 4.89 -0.04 5.44 -2.24 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 3 13 14 15 19 25 23 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 200 333.33 7.69 7.14 26.67 31.58 -8 3 3 3 3 4 7 13 19 22 22 24 24 26 26 26 26 28 28 27 28 28 27 27 27 26 27 26 25 23 19 14 13 14 13 13 12 11 0 0 0 0 33.33 75 85.71 46.15 15.79 0 9.09 0 8.33 0 0 0 7.69 0 -3.57 3.7 0 -3.57 0 0 -3.7 3.85 -3.7 -3.85 -8 -17.39 -26.32 -7.14 7.69 -7.14 0 -7.69 -8.33
1958-59 70 1959-60 72 1960-61 74 1961-62 71 1962-63 76 1963-64 81 1964-65 83 1965-66 89 1966-67 94 1967-68 95 1968-69 100 1969-70 107 1970-71 113 1971-72 131 1972-73 150 1973-74 155 1974-75 144 1975-76 147 1976-77 153 1977-78 174 1978-79 184 1979-80 187 1980-81 203 1981-82 210 1982-83 215 1983-84 216
25
1984-85 219 1985-86 227 1986-87 226 1987-88 224 1988-89 247 1989-90 266 1990-91 277 1991-92 307 1992-93 334 1993-94 471 1994-95 494 1995-96 503 1996-97 440 1997-98 442 1998-99 442 1999-00 443 2000-01 444 2001-02 450 2002-03 453 2003-04 456 2004-05 458 2005-06 461
4,445 4,485 4,356 4,393 4,853 5,271 5,568 6,216 6,860 8,419 8,610 8,717 8,230 8,368 8,392 8,477 8601 9060 9260 9592 10485 10437
4.05 0.9 -2.88 0.85 10.47 8.61 5.63 11.64 10.36 22.73 2.27 1.24 -5.59 1.68 0.29 1.01 1.46 5.34 2.21 .3.59 9.31 -0.46
29 37 48 55 66 72 75 81 95 138 132 143 143 150 166 150 146 141 148 146 155 155
0 27.59 29.73 14.58 20 9.09 4.17 8 17.28 45.26 -4.35 8.33 0 4.9 10.67 -9.64 -2.67 -3.42 4.96 -1.35 6.16 0
19 17 16 17 16 15 15 14 14 14 13 10 10 10 10 10 10 10 10 10 9 9
-17.39 -10.53 -5.88 6.25 -5.88 -6.25 0 -6.67 0 0 -7.14 -23.08 0 0 0 0 0 0 0 0 -10 -11.11
2,872 3,151 3,469 3,607 4,026 4,489 4,827 5,333 5,520 6,105 6,262 6,548 6,538 6,631 6,671 6,825 6913 7440 7676 8009 8492 9415
-1.61 9.71 10.09 3.98 11.62 11.5 7.53 10.48 3.51 10.6 2.57 4.57 -0.15 1.42 0.6 2.31 1.29 7.62 3.17 4.34 6.03 10.87
21 25 40 46 60 64 67 67 79 84 74 80 87 80 66 66 70 66 70 66 79 77
-8.7 19.05 60 15 30.43 6.67 4.69 0 17.91 6.33 -11.9 8.11 8.75 -8.05 -17.5 0 6.06 -5.71 6.06 -5.71 19..70 -2.53
10 9 8 9 9 8 8 8 6 6 5 5 5 4 5 4 4 5 5 4 4 4
9.09 -10 -11.11 12.5 0 -11.11 0 0 -25 0 -16.67 0 0 -20 25 -20 0 25 0 -20 0 0
Source : APTMA
(a) WORLD BASIC STRUCTURE DATA
Spinning
Weaving Shuttleless
Ring Spindles COUNTRY 2004 2005
O-E Rotors 2004 2005
Looms 2004 2005
Shuttle Looms 2004 2005
Argentina Australia Austria Belgium
1,500,000 1,600,000 40,000 185,284 32,208 176,864 32,208 17,248 15,804 -
43,000 15,108 15,804 -
5,500 -
5,580 -
17,300 -
17370 -
Beazil Czech Republic
4,498,900 4,593,900 327,150 332,750 39,390 40,590 12,000
272061 422341
222160 368606 2150000 266166 682000 -
47944 50064 38000 48000 23770 17500 3560 501143 79405 51000
44879 46999 31000 18533 17500 520908 71465 46000
5511 6862 3500 3300 1800 50 274 9631
5068 6451 3500 1750 55 238 -
268 792 3600 200 550 2000 103281
218 732 3000 510 1950 -
Egypt France Germany Greece Hungary India
2180000 80000 306900 692000 88912 37470358
38494598 37517082 Italy Japan 1298460 1992000 1204971 1803000
14058 15602 110509 75705 10420 9524 1460 18947 1334 16942
14420 13365
26
2441000 Korea , Rep Morroco 1574512 450000 Nigeria Pakistan Portugal 700000 9743483 860100 South Africa 288505 Spain Srilanka Switzerland 421564 150000 161000
2219000 1273856 700000 9815000 241800 223438 104650 1968117 6418744 1430000
51000 15012 40000 27000 150696 36200 35324 53060 72553 543318 576000
46000 13668 27000
37990 36182 1224 2100 2500 841 2500
44815 4000 11000
41341 11000
155000 25000 26000 225000 275000 22000 48190 69486 552634 502000 9050 2506 4814 1500 740 2043 4625 610 1500 1203 10000 50 612 909 20000 1447 1157 30 521 818 20000 -
Taiwan R.O.C 1995724 Turkey 6312339 USA 1597000
12897 12089 34388 30021 -
34500 36500 26000 -
(b) Growth of Spinning Industry in Pakistan
Pakistans spinning industry maintains a long history. At the time of independence, where many of the industries were non-existent in the country, spinning industry did exist. Total number of spindles in the country was 78,000. This number grew to 2.4 million till 1970. During this time, major growth took place during the period 1952-56. From 1970 onwards, the growth trend was steady. The growth of Pakistans Spinning industry during the period 1970 -99 is shown in Figure 3.5.2. Number of units has grown from 107 in 1970 to 442 in 1999. This represents an average growth rate of 5.3%. The growth was steady till 1993 after which a sharp increase can be seen with number of units growing from 334 to 471 during the period 1993-94. The increasing trend continued till 1996 followed by a sharp decline from 503 to 440. Good cotton crops in the early nineties attracted the investors towards spinning business. But two Consecutive crop failures in 1993 and 1994 created a shortage of cotton in the country resulting in an excess capacity build-up in the industry that led to closure of many units. A Large numbers of mills has been closed which will be discussed in subsequently.
27
PROVINCE-WISE CAPACITY EVALUATION (Updated 2007)
INSTALLED: SINDH PUNJAB N.W.F.P. BALUCH. SPINDLE ROTOR LOOMS WORKED: SPINDLE ROTOR LOOMS
1369882 6925503 729835 25861 957 38539 2514 200 0 91975 9397 0 2132310 7348510 812480 64487 3318 79052 4121 200 160 126800 14016 100
TOTAL 10420100 157755 7699
KASHMIR G.TOTAL 93696 0 0 10513796 157755 7699
9117195 73997 3471
64036 0 0
9181231 73997 3471
STOPPED POSITION SPINDLE ROTOR LOOMS

762428 38626 2361 423007 40513 1607 82645 0 160 34825 4619 100 1302905 83758 4228 29660 0 0 1332565 83758 4228
SOURCE: Textile Commissioner Org.
2.5 YARN Pakistan is at number four positions in worlds cotton yarn production with 8% share. Its production grew at an average rate of 4.9% for the period from 1990 to 1999. This growth figure is very healthy considering the average global yarn production growth rate of 0.53%. it is only slightly lower than Indias growth rate. About half of total yarn production in the 1970s came from the Punjab province. Its shares have increased since then. At present, more than 70 percent of yarn production occurs in Punjab (Table below). Conversely, the share of total yarn production in Sindh declined from 43 percent in the 1970s to about 20 percent at present. Sindhs share of yarn production has declined because of the relocation of installed capacity to the Punjab province, as described earlier .
28
Less than 10 percent of yarn production comes from other provinces, mostly from the Northwest Frontier Province and the Balochistan province. However, the Balochistan industry has been closed since 1983 after working for only a couple of years as a joint venture with Iran. The Balochistan industry that was in the public sector has been liquidated since then and is now on the privatization list. Because cotton is a determinant of the incomes for the poor, the closure meant an increase of poverty The provincial disparities in cotton growing and processing have important poverty implications. Since the bulk of cotton production and processing is in Punjab and Sindh, farmers and the rural areas in these provinces have the edge in terms of income generation over the rest of the provinces. Over the period 19902005, the production of yarn in Pakistan (cotton and man made) increased at an average annual rate of 4.7 percent (Table 4.9). This is astonishing growth, as it was achieved under conditions of political instability. The share of exports of yarn increased from 29 percent in the 1970s to 47.5 percent in 19911992, but started to ease since this peak. In 20042005, the share of exports of yarn declined to 26.5 percent. Some of the major
29
international markets for Pakistan cotton yarn in recent years include Hong Kong, China, United States, and South Korea (Table below).
Pakistan is a major producer of cotton yarn. Table 4.11 shows that its share in the world production has increased from 7.2 percent in 1994 to 9.1 percent in 2004, which is slightly lower than the share of India (9.7 percent) and greater than the share of the United States (5.8 percent). However, it is considerably lower than the share of Mainland China (46.8 percent).
The spinning industry of Pakistan produces most of the counts of yarn, but it is heavily tilted toward low counts,15 which are of relatively low value. Table 4.12
30
presents the count structure of cotton yarn production. In the 1970s, 57 percent of cotton yarn produced was coarse count: 23.2 percent in the 20s, 16.4 percent in the 10s, and 9 percent in the 16s. There were some within the medium count, mostly in the 21s. Except for the decline in the share in the 1980s, the share of cotton count 20s slightly increased in the 1990s and at present. The share of cotton count 30s also improved slightly over the period. However, the share of cotton count 21s declined as well as the share of cotton count 10s. Below Table shows the historical data of the world export of yarn (cotton and man made). It includes data on value (billion $), volume (million tons), and export unit price ($/kilogram) of the world as a whole and a few selected major yarn-exporting countries including Pakistan. The annual export unit price of Pakistan yarn is below the world average. It is also below the annual export unit price of the rest of the yarn-exporting countries included in the list. Over the period 19902006, the average export unit price of Pakistan yarn was $2.3/kilogram. The average world export price is $3.4/kilogram.
UPDATED CONSUMPTION OF RAW COTTON AND YARN to 2007 PROVINCE-WISE CONSUMPTION OF RAW COTTON , PRODUCTION OF YARN During The Month of JUNE 2007
31
RAW COTTON CONSUMPTION (IN PROVINCE 000 Kgs.)
PRODUCTION OF YARN (IN 000 Kgs)
COTTON
FIBRE
TOTAL
COTTON
BLENDED
TOTAL
SINDH PUNJAB N.W.F.P BALUCHISTAN TOTAL A.KASHMIR G.TOTAL
42670 139557 5281 5584 193092 494 193586
3923 25706 4434 467 34530 89 34619
46593 165263 9715 6051 227622 583 228205
32812 100245 6865 4338 144260 354 144614
2816 19502 2011 396 24725 230 24955
35628 119747 8876 4734 168985 584 169569
PRODUCTION OF COUNT - WISE YARN WITH PERCENTAGE (000 KGS.)
COUNT COARSE 1-9s 10s 12s 14s 16s 18s 20s Sub. Total
2004 - 2005 QUANTITY 118346 153753 75432 39349 163019 56506 397231 1003636 %AGE 5.67 7.37 3.61 1.89 7.81 2.71 19.03 48.09
2005 - 2006 QUANTITY 131885 153588 88650 43683 170993 43209 413364 1045372 %AGE 5.95 6.93 3.99 1.97 7.71 1.95 18.65 47.15
2006 - 2007 QUANTITY 140648 159842 93592 55728 170297 67983 376494 1064584 %AGE 6.28 7.13 4.18 2.49 7.6 3.03 16.8 47.5
MEDIUM
21s 24s 28s 30s 32s 34s Sub. Total 72717 80572 47678 180163 58614 17799 457543 3.48 3.86 2.28 8.63 2.81 0.85 21.91 71533 75496 55336 191297 65968 20078 479708 3.23 3.4 2.49 8.63 2.97 0.92 21.64 75108 92589 76493 190813 79798 32649 547450 3.35 4.13 3.41 8.51 3.56 1.46 24.43
FINE
36s 40s 47s Sub. Total 18391 58877 14486 91754 0.88 2.82 0.69 4.39 19864 74103 8013 53756 0.9 3.34 0.36 2.42 25752 91448 24343 141543 1.15 4.08 1.09 6.32
SUPER FINE
48s 8982 0.43 12845 0.58 16678 0.74
32
60s 80s Sub. Total
10280 18744 38006
0.49 0.9 1.82
17089 23822 53756
0.77 1.07 2.42
34622 29305 80605
1.54 1.31 3.6
P. Viscose P. Cotton Sub. Total TOTAL
90833 378032 468865 2059804
4.35 18.11 22.46 98.68
95671 403860 499531 2180347
1.64 18.22 22.54 98.36
81082 259176 340258 2174440
3.62 11.56 15.18 97.02
WASTE G.TOTAL Non Listed Units TOTAL YARN
27483 2087287 203053 2290340
1.32
36255 2216602 339695 2556297
1.64
66706 2241146 486409 2727555
2.98
Source : Textile Commissioner organization
2.6 CLOTH The textile industry of Pakistan has traditionally relied on the manufacturing of pure cotton fabric. Whereas the global mill consumption is rapidly moving towards the usage of a diverse range of staple fibers and artificial and synthetic filaments. This is also reflected in Pakistan's export of woven fabric, where Pakistan accounts for almost 7% of the world exports in cotton and blended fabrics. On the other hand its share in manmade fabric exports is limited to 2% only.
Cotton Cloth
While the production of cloth in mill sector is reported, the same is not true with production of non-mill sector. Output of the non-mill sector is estimated although its output is seven times more than the mills sector. The production of cloth, both from mills and nonmills sector have registered a growth of 2.7 percent during July-March 2007-08 (see below Table). This sector showed growth and thus served as the main strength for down stream sectors like bed wear made-up & garments. However, it recorded somewhat negative export growth for July-March 2007-08 (- 11.0%) as compared to 200607. This decline in exports can largely be attributed to increasing cost of production due to shortage of cotton in the local market, increased wages
33
of unskilled workers, massive power cuts, rising international competition and poor infrastructure have made the local manufacturers and exporters noncompetitive in the international market. Meanwhile, Pakistans competitors e.g., China, Bangladesh, India and Sri Lanka are aggressively marketing their products and are more competitive in the international market than Pakistan (7.3%) as compare to last year. Currency differentials between India (Pakistans traditional rival in this sector) and Pakistan as well as increased stress on quality control, played favorable for the country and diverted more orders towards Pakistani garment exporters.
Installed and Used Capacity in Weaving Sector
2.7 Made-up Textiles The pattern of cloth production is different than spinning sector. There are three different sub-sectors in weaving , integrated, independent weaving units, and power loom units. Investment has taken place in shuttle less
Production of Cloth (M. Sq. Mtrs)
34
2.8 Hosiery & Readymade Garments
The hosiery and knitwear industrial network comprises 3,500 large, medium and small units, 85% of which are small enterprises, 10% medium ventures and only 5% large integrated factories. the industry provides jobs to 700,000 people in an environment dominated by redundancies and downsizing in giant multinationals, foreign banks and big corporations.
The industry sustains directly, livelihood of 210,000 skilled workers and their families; 490,000 unskilled workers and their kith and kin. Another 350,000 people benefit in allied cottage industries. Thus the industry provides directly and indirectly sustenance to well over a million people.
Despite being a labor -intensive industry, the investment in the knitwear and hosiery units is estimated at rs. Seven billion and tops the list of industries for value added exports ranking as the second largest foreign exchange earner in the country.
Knitwear exports consist of knitted and processed fabrics knitted garments; knitted bed sheets, socks etc. and has the largest share of the nation's textile exports. it is a pride to mention here that all the exports of all the above knitted products is 35 % of the nation's exports. the knitwear industry consequently emerges as the countries top foreign exchange earner.
There are about 12,000 knitting machines spreads all over the country. The capacity utilization is approx 70 percent. Besides locally manufactured
35
machinery, liberal import of machinery under different modes is also being made and the capacity based on exports is being developed. This sector has tremendous export potential. However, the sub-sector remained under pressure from its competitors during the year under review and recorded a decline of 8.0 percent in exports as against last year amid tough competition emerging from the newly-inducted members to the European Union (EU) belonging to the former East European bloc.
Readymade Garment Industry
The Garment Industry provides highest value addition in Textile Sector. This industry is distributed in small, medium and large scale units most of them having 50 machines and below; however, large units are now coming up in the organized sector of the industry. The industry enjoys the facilities of duty free import of machinery and income tax exemption. During the year under review the sector recorded a healthy growth in exports the falling export of textile products. Assassination of Ms Bhutto in December brought to halt not only the industrial activities but huge number of export shipments could not make their way to the sea ports because of strikes and unavailability of cargo transport compelling importers of Pakistani products to divert their orders to other destinations.
36
Chapter 3: EXPORT PERFORMANCE
3.1
Over view
3.2
Export of Textile Manufactures
3.3
Problems
3.4
Role of the textile industry in national economy
37
3. EXPORT PERFORMANCE,
3.1 Over view, Overall exports recorded a growth of 10.2 percent during the first ten months (July- April) of the current fiscal year against a growth of 3.6 percent in the same period last year. In absolute terms, exports have increased from $ 13847.3 million to $ 15255.5 million. However, all the major components of textile manufactures were up substantially but exports in quantum term registered a sharp decline across the board with exception of raw cotton. In other words Pakistans textile exports could not benefit from higher international prices and as such the exports performance of this sector has been dismal in 2007-. The dismal performance of textile exports can be attributed, beside their structural issues, to rising cost of production owing to increase in domestic cotton prices and stifling power shortages. In addition, the deteriorating law and order situation in the country also resulted in reported diversion of export orders to other countries. Poor quality of cotton on account of contaminated cotton issue has also adversely affected the export of spinning industry.
Furthermore, textile exports appear to have also suffered from the slow down in the US economy that has been the largest destination for Pakistani exports during the last few years. In addition, Pakistan also faced tough competition from China, India, Bangladesh and Turkey in the EU market for textile apparel. In the case of bed wear exports; its exports to EU market are rising after the reduction of anti-dumping duty on this category from the previous level of 13.1 percent to 5.8 percent.
38
3.2 Exports OF Textile Manufactures However, in the US market, this category of export faces tough competition in terms of prices, especially from China. Export of petroleum group accounting for 6 percent of total exports contributed 18.2 percent in the overall exports growth for the year. Export of petroleum product and Naphtha registered an impressive growth of 83 percent and 16 percent respectively. Unlike textile manufactures, exports of other manufacture accounting for 19 percent of total exports posted a stellar growth of 33.2 percent in the current fiscal year. Accordingly, it contributed over 50 percent to this year overall exports growth. The major performers under this category of exports include leather tanned; leather manufacturer; surgical goods; chemical and pharmaceutical products. The performance of carpets & rugs and engineering goods has been lackluster as they registered negative growth. All other manufactures under this category of exports Export of all other items accounting for over 5 percent of total exports grew by almost 60 percent and accordingly, contributed 20.6 percent to this years overall exports growth. (see below Table).
39
moving away from conventional textile products to new non-conventional items such as other manufactures, petroleum product and food group (see figure 8.1). However, the pace of diversification is painfully slow. The current food price hike at the global and national level provides window of opportunity for Pakistani farmers to of the major exporters of rice and wheat, therefore, contributing substantially to overall export growth. the major export commodities are given in Table
40
41
Share of cotton yarn and cotton cloth has also witnessed a decline. However, the shares of other categories of textile exports such as ready made garments, synthetic textile and made up articles have shown a marginal increase during the first nine months of current fiscal year.
Pakistans economy lacks is the export of high technological products and software
Cotton,
Textile and Apparel as defined by TDAP, for purposes of this analysis, includes all products starting from raw cotton and ending up with even cotton waste inclusive of tents and canvas. It, of course, includes products made from cotton and manmade yarn and fiber.
42
Total T&A exports for six months ending December 2007 were US $5.2 billion. These were US $280 million less than last year ie 5%. Of the total exports of US $5.2 billion, countries where exports increased accounted for US $2.7 billion ie almost half. The balance exports of US $2.5 were from countries where exports declined.
All countries where exports were higher, produced a combined increase of US $128 million. Those countries which reflected a decline generated a total decrease of US $408 million resulting in the net decline of US $280 million. On a total T&A basis, the countries generating the major part of the above increases of US $128 million were Italy US $20 million, Turkey US $30 million, Netherlands US $18 million and a host of non traditional markets ("others") that jointly produced increase of US $21 million. It is noteworthy that the nontraditional markets generated US $21 million out of the total increase of US $128 million. This reflects the efforts being made by the exporters, supported by TDAP, to venture into new markets. Of the decline in exports of US $408 million, the major countries pulling down Pakistan's exports were USA US $311 million, Hong Kong US $49 million, Saudi Arabia US $12 million and China US $10 million.
It is however, noteworthy that on a total T&A basis, an actual decline over last year was seen only in a total of nine countries. In all other countries, exports were either equal or higher than last year. However the largest declines in the US, China, Canada and Hong Kong could not be made up by the growth in the rest of the world.
This clearly reflects that Pakistan is not competitive and serious attention needs to be paid to this primarily by the government (for short term support) and the private sector (for both short and long term). Whether we like it or not the fact is that today Pakistan's GDP growth, export levels, trade deficit, foreign exchange reserves, local investment in (trail-blazer for FDI), employment generation, revenue generation welfare of the farming community, welfare of the women employed in the rural areas and indeed the overall national economic activity are all seriously dependant upon the textile and garment sector. A lot has been
done to address the issues and leverage the opportunities but a lot more is required. Question is not 'whether Pakistan can afford to, the question is 'whether Pakistan can afford not to'!
There is no doubt that during 1999 to 2005 when exports of T&A were growing at a fast pace (8 years increase of over US $5 billion!) and returning revenue and cash flows to the government and the industry, fundamental issues could not be completely addressed.
These are need for increase in cotton production, minimizing cotton contamination, improved growing capacity and technology, standardization of cotton, new cotton seed development through research, incentives etc to the value added sectors, increase in scale of production in garments, training of human resource, use of ICT in industry, JVs and FDI for technology, marketing and better management. Today, with earnings not increasing and government revenues under pressure to invest further behind these, albeit essential, feels painful to both the government and the private sector.
The above analysis is for all textiles and apparel. Within this large export sector there are various product groups such as cotton, yarn, fabric, garments, bed ware, towels etc. The export increases and decreases by country, in each of these country and product groups are significantly different. The analysis that follows is therefore product group wise.
RAW COTTON:
Exports for six months ending December 2007, were a total of only US $20 million. These were US $4 million lower than last year ie 18%. Exports made were primarily to China of US $2 million, Myanmar US $0.7 million, Bangladesh US $7.5 million, Indonesia US $5 million. It may be noted that exports to China and Myanmar (last year were virtually nil) and that exports declined to Bangladesh and Indonesia by 19% and 41% respectively.
44
Raw Cotton (July-June 02-03 to July-June 06-07)
140,000 120,000 100,000 $889.58 80,000 60,000 40,000 20,000 0 Jul-Jun 02-03 Jul-Jun 03-04 Jul-Jun 04-05 Jul-Jun 05-06 Jul-Jun 06-07 Mar-Feb 07-08 $68,151 $1,277.80
$1,400.00
117,084
$109,957 $1,087.00 $1,114.00 1,149.41
$1,200.00 $1,000.00 $800.00 $600.00
$939.13
55,100 $49,016
62,658
$47,671 $50,226
37,307
45,065
40,306
46,328 $400.00 $200.00 $0.00
Quantity (000) MT
Value ('000')
AUP (MT)
COTTON YARN:
Total exports for six months ending December 2007 were US $673.5 million ie 7.8% of Pakistan's total exports. Compared to last year these were US $28.2 million or 4.0% lower.
Exports increased over last year to Turkey US $28.8 million or 151%, Bahrain US $8.0 million or 382%, Portugal US $6.2 million or 17.6%, Bangladesh US $4.6 million ie 13%, Netherlands US $4 million ie 225%, Germany US $2.2 million or 161%, Belgium US $2.1 million or 67%, Vietnam US $2.0 million or 75%, Philippines US $1.7 million or 62%, UAE US $1.5 million or 62%.
However, decreases outweighed the increases and export over last year declined in USA US $24.4 million or 52%, Hong Kong US $24 million or 12.5%, China US $11.9 million or 7.6%, South Korea US $6.3 million or 13.6%, Japan US $3.5 million or 12.9%, Egypt US $2.5 or 24%, Indonesia US $3.7 million or 40%, Brazil US $2.7 million or 61%, Austria US $2.7 million or 99.9%. Net of the increasing and decreasing countries, total exports were US $28.2 million or 4% lower than.
45
Nil exports compared to last year were made to Yemen, Iraq, Kuwait, Russia, Denmark, North Korea, Sweden, Ireland, Qatar, Norway and a few other countries.
YARN OTHER THAN COTTON YARN:
The product range included here is cotton yarn mixed with manmade fibre and filament yarn etc. Total exports were US $25.5 million which were US $7.1 million lower than last year ie a decline of 21.9%.
Significant increases in value were achieved in Turkey US $1.6 million or 91%, South Korea US $1.3 million or 223%, Brazil US $787K (Nil last year), Bangladesh US $676K ie 39%, Sri Lanka US $552K or 90%. Other countries where exports also increased by US $l00K to US $150K were Portugal, Philippines, Argentina and Kenya.
In terms of trends, significant percentage increases were achieved in Argentina (5600%), Australia 1666%, Hungary 4100%, Denmark 1600%, Morocco 49%.
Significant decline in exports was experienced in India US $3.2 million or 100%, Hong Kong US $1.5 million ie 66%, China US $1.3 million ie 79%, Iran US $829K ie 74%, Bahrain US $698K or 87%, Italy US $667K or 65%, Egypt US$479 ie 7 1%, Germany US $436K or 83%. Other countries of a decline between US $100 to US $315K were Afghanistan, Canada, Austria, Belgium, Japan, Saudi Arabia, UK, Mauritius, and France. It is noteworthy that in all countries where exports declined, the percentage declines were high which suggests sudden decline in demand. Besides countries to which zero exports could be made compared to last year were Austria, Malaysia, Russia, Myanmar, Algeria, Thailand, Poland, Oman, Azerbaijan, Czech Republic, Qatar, Switzerland, Greece, Jordan, New Zealand, Romania and few others. Exports to these countries last year were small but nil exports suddenly to a large number of countries is note worthy.
46
COTTON FABRIC:
This included fabric greige and dyed finished but made of cotton only. Does not include made up items of fabric such as bed sheets, etc. Total exports were US $905 million that was a decline of US $89 million over last year or 9%.
Countries where significant growth in export value was achieved were (and note the high percentage increase in some cases), Italy US $7.9 million ie 14%, Russia US $6 million ie 42%, Brazil US $4.4 million ie 120%, Ukraine US $4.4 million ie 144%, Belgium US $3.7 million ie 14%, Spain US $2.8 million ie 9%, Romania US $2.6 million ie 247%, Netherlands US $2.4 million ie 16%, Finland US $2.2 million ie 46%, countries with increases of US $1 to US $2 million were Portugal, Egypt, Mexico, France, Estonia, Bahrain, Latvia and Azerbaijan.
Countries reflecting significant percentage increase trends were Russia 42%, Brazil 120%, Ukraine 143%, Finland 46%, Bahrain 51%, Romania 247%, Lebanon 50%, Latvia 369%, Czech Republic 121%, Azerbaijan 1838%, Afghanistan 508%. Against nil exports last year, exports were achieved in Myanmar, Maldives and Uzbekistan this year.
Countries where export declined were significant were US $35.4 million ie 36%, Hong Kong US $21.5 million ie 42%, UAE US $12.8 million or 40%, Sri Lanka US $9.7 million or 18%, South Africa US $7.3 million ie 26%, UK US $7.0 million ie 22%, India US $6.8 million or 23%, Saudi Arabia US $4 million ie 29%, Indonesia US $3.6 million ie 64%, Canada US $3.4 million ie 46%; other relatively significant countries where exports declined by between US $1 million to US $3 million were Turkey, Australia, Jordan, Japan, Norway, Niger, Philippines, Qatar, Nigeria and Iraq.
THE COMPARATIVE PERFORMANCE OF THE YEARS , 2004-05 , 2005-06, 2006-07, (JULY-JUNE)
% INCRE/DECR. 2004-05 2005-06 2006-07 (2006/2007)
PRODUCTION (M.BALES)
47
RAW COTTON CONSUMTION (000KGS) RAW COTTON M.M.FIBRE TOTAL IN BALES OF 170KGS
14.347
12.395
12.4111
0.13
2124408 498416 2622824 15428377
2407560 525000 2932560 17250353
2584428 580000 3164428 1861428
7.35 10.48 7.91 -89.21
PRODUCTION (000 KGS) COTTON YARN BLENDED YARN TOTAL 1770340 520000 2290340 2006299 550001 2556300 2039056 688500 2727556 1.63 25.18 6.7
CONSUMPTION OF YARN MILL SECTOR (000 KGS) 105362 95710 104423 9.1
PRODUCTON (000 SQ.MTR.) COTTON CLOTH BLENDED CLOTH TOTAL NON MILL SECTOR G.TOTAL 842292 82380 924672 6192000 7116672 862983 52273 915256 7069500 7988699 951819 61100 1012919 7682738 8695657 10.29 16.89 10.67 8.67 8.85
EXPORT (IN 000) RAW COTTON IN KGS. YARN IN KILOGRAM CLOTH IN SQ.MTR. 117084 504722 2399458 63025 694526 2625174 45069 674841 2211182 -28.47 -2.83 -15.77
CAPACITY INSTALLED IN JUNE LPINDLE ROTOR LOOM 10906068 202356 9322 11168780 199520 8747 11265954 188328 7899 0.87 -5.61 -9.69
48
CAPACITY WORDED (AVG.) SPINDLE ROTOR LOOM 8816850 122477 4705 9631304 122168 4205 10057623 113728 4252 4.43 -6.91 1.12
KNITTED CROCHETED FABRICS:
Products included are all kinds of knitted fabric but not made ups of knitted material. Exports at US $32.8 million were US $2.8 million more than last year or 9%. Significant countries remaining lower than last year were the USA US $2.2 million ie 50%, UAE US $2.1 million or 48% and Jordan US $1.0 million or 45%.Significant increases in countries that more than offset the decreases were achieved in Sri Lanka US $2.3 million ie 72% and India US $1.0 million ie 320%.
READYMADE GARMENTS:
Products included here are all kinds of readymade garments made from woven material for men, boys, girls, ladies but do not include garments made from knitted material (such as housing, T-shirts etc). Garments made from cloth made of manmade fiber are also included here.
Exports at US $714 million were 8.2% of total exports of Pakistan (last year 9.6%). Exports declined over last year by US $93.5 million or 11.6%.
Exports increased in 35 other countries as well but in dollar term these increases were less than US $500K in any one country. Some high growth trends were seen in Brazil 178%, Hong Kong 38%, Japan 64%, Argentina 51%, Lithuania 920%, Algeria 280%, Russia 73%, Ukraine 274%, Estonia 1023%, Latvia 126%, Kenya 55%, Lebanon 767%, Egypt 680%, Libya 1000%, Malta 80% and Zimbabwe 150%. This reflects the exporters search for new markets as the traditional US and EU markets become more competitive.
Major declines in exports were seen in the USA of US $76 million or 21%, UK US $5.6 million or 6%, Belgium US $11 million or 33%, Saudi Arabia US $3.2
49
million or 33%. Exports declines of around US $1 million to US $2 million were seen in Ireland, Sweden, Canada and France. Minor declines were seen in over 40 other countries. Significant decline trends in percentage terms were seen in Singapore 68%, Luxembourg 99.7%, Kuwait 78%, Oman 54%, Switzerland 55%, Mexico 49%, Sri Lanka 53%, Nigeria 97%, India 80%, Iran 68%, Bahrain 58%, Afghanistan 96%, and few others.
KNITWEAR:
The product range covered is jackets, blazers, men/boys knitted trousers, shirts, T-shirts, track suits, socks, gloves and other knitted garments of cotton, wool, artificial synthetic and other fibers, etc.
Total exports for six months ending December 2007 at US $936 million were 11% of total Pakistan exports (last year 11.5%). These were US $30 million below last year ie 3%. Combined export value of all countries where exports declined at US $693 million, was much more than the combined export value of countries where exports increased ie US $242 million.
Of countries where exports were less than last year the total decline was US $65 million. Of this USA alone declined by and US $46 million ie 7.3%, Netherlands US $8 million ie 17.7%, Spain US $2.6 million ie 8% and Hungary US $2.5 million ie 54%. All other countries that declined were lower than last year by less than US $450K each.
Of countries where exports were higher than last year, Germany led the growth and increased by US $7 million ie 23% followed by Italy US $5.7 million ie 19%, UAE US $5.5 million ie 65%, UK US $3.8 million ie 5%, Belgium US $2.3 million ie 12%, France US $1.7 million ie 11%, Saudi Arabia US $1.6 million ie 62%, Norway US $1.0 million ie 166%, Sweden US $1 million ie 32%. All other countries were exports where higher than last year produced an increase of less than US $500K in anyone country.
Some noteworthy trends in percentage term were Ireland 20%, Mexico 35%, Australia 20%, Sri Lanka 28%, and Switzerland 56%. More than 30 countries
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were where exports increased over last year and where exports were more than US $1 million. With increasing competition in the traditional markets, this reflects the exporters efforts to seek new markets such as Poland, Qatar, Estonia, Russia, Argentina, Azerbaijan, Slovenia, Bahrain, Senegal, Morocco, Kyrgyzstan, Cyprus, Egypt, and Iraq etc. TDAP continues to support these efforts with organized delegation and higher level of participation in exhibitions.
MADE-UPS OF TEXTILES:
The product range covered includes sanitary towels, napkins, dishcloth, wash cloth, bar mops, other cleaning cloth, bath mats and curtains etc. It does not include bed ware, pillow covers, towels etc.
Total exports for the 6 months ending December 2007 were US $255 million ie 3% of Pakistan's total exports and about the same as last year. These exports increased over last year by US $17.9 million ie 7.5%. Of the total net exports of US $255 million, countries where exports increased had a combined export value of US $233 million and those where exports declined were a total of US $22 million.
Export value of countries where exports grew was much more than export value of countries where exports declined.
In the countries where exports increased, the total increase was recorded at US $24 million. Of this US $24 million, significant increases were in USA US $7.4 million ie 5%, UK US $6.8 million ie 20%, Germany US2.0 million ie 25%, Netherlands US $1.3 million 30%, South Africa US $1.4 million ie 82%, UAE US $1.0 million ie 33% and Australia US $0.8 million ie 35%. There were 43 other countries where exports increased but no one country exceeding an increase of US $500K. Some significant trends in percentage growth term were Poland 19%, Greece 37%, Kuwait 74%, Portugal 48%, India 130%, Brazil +678%.
In countries where exports declined the combined decline was US $6.0 million. This was mainly because of Italy US $1.2 million ie 12%, France US $1.2
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million ie 22%, Spain US $0.6 million ie 18%. Some other significant declines in percentage terms were Ireland, Australia, Malaysia, Norway, Iran, Mexico, Russia and Sri Lanka.
BED WARE:
The product range includes woven and knitted products such as bed sheets, bed/pillow covers, bed linen, table linen/covers etc. Total exports for six months ending December 2007 were US $959 million. These exports were US $69 million lower than last year ie 6.7%. Out of the total exports of US $959 million, countries where exports increased were a total of US $378 million and where exports declined were a total of US $581 million.
Of the countries where exports were higher than last year, the total increase achieved was US $60 million. Of the total increase, the significant increases were achieved in Belgium US $10 million ie 86%, UK US $5.3 million ie 6%, Italy US $5.8 million ie 19%, Denmark US $4 million ie 48%, Brazil US $3.7 million ie 368%, Kenya US $1.3 million ie 50%, Poland US $1.0 million ie 38% and Greece US $0.7 million ie 30%. Increases were also recorded in 24 other countries and some significant percentage increases were in Estonia 132%, Philippines 97% and Egypt 1102%.
Of countries, which remained lower than last year, the total decline was US $128 million. Of the major declines USA led with a drop of US $99 million ie 20%, Germany US $6 million ie 10%, UAE US $3.5 million ie 15%, Austria US $4.0 million ie 73%, Canada US $2.5 million ie 11%, Turkey US $2.0 million ie 93%, Switzerland US $1.4 million ie 53%, Australia US $1.2 million ie 6%, France US $1.1 million ie 2%, and Hungary US $1.0 million ie 48%. In addition to these countries exports declined in 32 other countries. Some significant declines in percentage terms were in Czech Republic 29%, Mexico 52%, Portugal 58%, Ukraine 57%, Indonesia 78%, China 90%, Japan 70%, Maldives 91% and Bangladesh 96%.
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TOWELS:
Products included in this group are towels and products of towel material of cotton, mill made. Total exports were US $284 million or 3.3% of total Pakistan's exports (last year 3.9%). Exports declined over last year by US $39 million ie 12.2%. Of the total exports of US $284 million, countries where exports increased over last year were US $67 million only. Where exports declined, the total exports were US $217 million.
The total increase in exports achieved from countries where exports were higher than last year was US $15 million. Of this, the significant contributors were UAE US $2.4 million ie 24%, Spain US $1.4 million ie 17%, Sri Lanka US $1.2 million ie 350%, Netherlands US $1.0 million ie 15%, South Africa US $1.0 million ie +16%, Saudi Arabia US $0.7 million ie 22%, Brazil US $0.7 million 46%.Apart from these countries exports increased in more than 35 other countries. Some significant growth in percentage term was achieve in Ireland 34%, Portugal 55%, Malaysia 104%, Romania 99%, Argentina 404%, Austria 173%, Cyprus 97%, Lithuania 257%, Philippine 209%, Jordan 125% and Hong Kong 319%. These reflect the exporters and TDAP's efforts to diversify into newer markets.
The total decline in exports in countries which remained lower than last year was US $54 million. Of this, major countries which were lower than last year were USA US $43 million ie 23%, Canada US $1.4 million ie 18%, France US $1.4 million ie 33%, Sweden US $1.0 million ie 37%, Czech Republic US $0.8 million ie 56%, Russia US $0.7 million ie 37%, New Zealand US $0.8 million ie 22% and Belgium US $0.7 million ie 15%. Additionally declines were recorded in 27 other countries as well, with no one country declining by more than US $500 K. Some significant and noteworthy declines in percentage terms were Denmark 22%, Norway 18%, Turkey 93%, Mexico 81%, India 100%, Germany 3.48%, Italy 6.4%, Slovenia 36.3% and Kenya 29.5%.
ARTIFICIAL SILK AND SYNTHETIC TEXTILES:
The product range included is fabrics, synthetic filament, printed dyed or mixed, manmade staple fibers. Worldwide, textiles and apparel produced from
53
manmade fiber or with manmade fiber is the dominant sector. In Pakistan this sector has remained depressed partly on account of poor growth in the filament yarn sector.
Be as that may, the current exports for six months ending December 2007 were US $256 million. This is an increase of US $41 million over last year ie 19%. It may be recalled that artificial silk and synthetic textiles exports, even last year, grew by 11.5% contributing US $229 million to the growth in Pakistan's exports.
The countries that were performing better than last year produced a total export level of US $198 million. Those that remained below over last year were of a total export value of US $58 million.
Some noteworthy and significant trends in terms of percentage increases were Finland 32%, Hungary 41%, Australia 72%, Morocco 14.4%, New Zealand 13.3%, Romania US $0.6 million ie 2.8%, Thailand US $0.6 million ie 1.67% and Canada 19%.
Total decrease in exports as a total of all countries that remained below last year was US $18 million. Of this, significant declines were in Spain US $2.7 million ie 23%, Italy US $2.7 million ie 29%, Niger US $1.7 million ie 53%, Poland US $1.5 million or 31%, Belgium US $1.1 million ie 21%.
Exports of artificial silk and synthetic textiles has in last few years shown a very healthy growth trend and producers, exporters should fully capitalise on this opportunity. It appears that the opportunity is widespread as exports are not concentrated in a few markets and a large number of countries are reflecting a willingness to buy from Pakistan.
TENTS AND CANVAS:
This product group includes products such as sails, tents, tarpaulins, awaning, sunblinding, etc. Total exports for six months ending December 2007 were US $42 million and remained US $0.6 million or 1% below last year. The major countries contributing to increases over last year were Sudan US $9 million,
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with increases in Jordan, Kenya and Yemen remaining between US $1.0 million to US $1.3 million each; the major countries which pulled down Pakistan's exports were Saudi Arabia US $9.3 million ie 52% and Kuwait US $1.7 million ie 25%. This product group largely remains dependent on donor purchases and there is an enormous potential and need to diversify product range including products of the leisure industry.
EXPORT FROM PAKISTAN
VLAUE IN '000' $ S. COMMODITY BY COUNTRIES 2004-05 % NO. TEXTILE & GARMENTS A CATEGORY EXPORT SHARE EXPORT 2005-06 % SHARE EXPORT 2006-07 % SHARE
RAW COTTON
109,957
0.76
68,151
0.41
50,226
0.30
COTTON YARN YARN OTHER THAN COTTON
1,056,535
7.34
1,382,874
8.41
1,428,041
8.41
YARN
30,916
0.21
36,996
0.22
67,193
0.40
COTTON CLOTH
1,862,886
12.94
2,108,183
12.81
2,026,388
11.94
KNITTED CROACHED FABRICS
187,158
1.30
51,378
0.31
63,568
0.37
READY-MADE GARMENTS
1,087,954
7.56
1,309,990
7.96
1,384,775
8.16
KNITWEARS
1,635,033
11.36
1,751,494
10.65
1,961,048
11.55
TEXTILE MADE UPS.
2,436,013
16.93
3,043,582
18.50
3,069,651
18.08
a) BED WARE
1,449,533
10.07
2,038,064
12.39
1,995,899
11.76
b) TOWELS c) TEXTILE MADE UPS

(EXCL.TOWEL&BEDWARE)
520,480
3.62
587,641
3.57
602,547
3.55
466,000
3.24
417,877
2.54
471,205
2.78
TENTS AND CANVAS ART SILK AND SYNTHETIC
66,569
0.46
38,902
0.24
69,060
0.41
10
TEXTIL
300,264
2.09
200,308
1.22
419,724
2.47
55
EXPORT FROM PAKISTAN ( USA ) Value in 000 $ % S. Top 10 Major Products 2004-05 SHARE 2005-06 % SHARE 2006-07 % SHARE
KNITWEAR ( HOSIERY )
929,399
26.97
1,087,589
25.94
1,261,437
30.15
BED WEAR
595,505
17.28
1,046,659
24.96
941,704
22.51
READYMADE GARMENTS
376,021
10.91
520,894
12.42
533,920
12.76
TOWELS
255,457
7.41
325,485
7.76
336,538
8.04
MADEUPS ART. OF TEX.
241,445
7.01
242,924
5.79
286,007
6.84
COTTON FABRICS
292,185
8.48
305,894
7.30
192,780
4.61
CARPETS LEATHER MANUFACTURES
109,782 82,928
3.19 2.41
112,017 92,845
2.67 2.21
92,225 83,519
2.20 2.00
LEATHER CLOTHING
43,042
1.25
47,334
1.13
47,898
1.14
LEATHER GLOVES
29,426
0.85
34,813
0.83
28,404
0.68
OTH.LEATEHER MANUF.
10,460
0.30
10,698
0.26
7,217
0.17
COTTON YARN SURGICAL
106,467
3.09
127,557
3.04
81,249
1.94
10
INSTRUMENTS SUB TOTAL
52,835 3,042,024
1.53 88.26
50,134 3,911,998
1.20 93.30
45,537 3,854,916
1.09 92.15
EXPORTS BY ECONOMIC CATEGORIES

VALUE IN MILLION DOLLARS YEAR TOTAL EXPORTS PRIMARY COMM. % SHARE SEMI MNFGD. % SHARE MANUFGD COMM. % SHARE
1980-81
2,958
1,295
44
335
11
1,328
45
1981-82
2,490
864
35
332
13
1,294
52
1982-83
2,708
812
30
363
13
1,533
57
1983-84
2,768
800
29
383
14
1,585
57
1984-85 1985-86
2,491 3,070
720
29 35
437 489
18 16
1,334 1,520
53 49
56
1,061
1986-87
3,686
977
27
769
21
1,940
52
1987-88
4,455
1,259
28
867
20
2,329
52
1988-89
4,661
1,528
33
875
19
2,258
48
1989-90
4,954
1,007
20
1,171
24
2,776
56
1990-91
6,131
1,145
19
1,498
24
3,488
57
1991-92
6,904
1,312
19
1,477
21
4,115
60
1992-93
6,813
1,006
15
1,405
21
4,402
64
1993-94
6,803
706
10
1,614
24
4,483
66
1994-95
8,137
911
11
2,029
25
5,197
64
1995-96
8,707
1,414
16
1,885
22
5,408
62
1996-97
8,320
932
11
1,711
21
5,677
68
1997-98
8,628
1,096
13
1,495
17
6,037
70
1998-99 19992000 20002001 20012002 20022003 20032004 20042005 20052006 20062007
7,779
899
12
1,402
18
5,478
70
8,569
1,040
12
1,317
15
6,212
73
9,202
1,157
13
1,388
15
6,657
72
9,135
983
11
1,310
14
6,842
75
11,160
1,218
11
1,220
11
8,722
78
12,313
1,228
10
1,448
12
9,637
78
14,391
1,550
11
1,457
10
11,384
79
16,451
1,875
11.4
1,771
10.8
12,805
77.8
16,976
1,900
11.2
1,822
10.7
13,254
78.1
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3.3 Problems Textile sector, the largest foreign exchange earner having 55%t export share, is fighting hard to remain competitive, which has been dented by the record cotton prices in the local market. Exporters have predicted further decline in shares of textile sector in overall export of the country if the present state of affairs continue to persist in the coming days. Countrys textile sector is struggling hard since the last fiscal year to compete in the international markets, where its regional competitors are penetrating by registering substantive growth in export since the very abolition of quota regime. The textile sector, already facing the brunt of high energy prices is now faced with soaring prices of cotton which have 75% share in total cost of the textile products. This has brought more woes to the textile sector already struggling to maintain its share in the international market.
On the other hand textile industry has been disappointed at the current year Trade Policy, saying that the government did not offer any incentive for the sector to compete with the regional competitors in the international market. The country's textile exports slumped to $10.561 billion in 2007-08 as compared to fiscal export target of $12 billion, falling short by $1.46 billion. Whereas, textile exports in the last fiscal year were $10.787 billion. The regression is mainly attributed to power shortages, the soaring cost of production and political turmoil, besides a stiff competition in the world market.
According to the FBS, the growth in textile export goods plunged by 2.6% to $905.9 million during July 2008 from $930.3 million in the corresponding period of last year. The growth in textile exports is likely to sluggish further during FY 2008-09 amid decline in cotton production in rain-affected areas of Punjab and Sindh. Agricultural experts are projecting the local cotton is likely to approximate 12.5 million bales for the current crop season (2007-08) which seems remain below official target of 14 million bales on the account of bug attack on crop harvestings yields. The textile industry including spinning, weaving and composite has been suffering substantially for the last few years owing to soaring cotton prices, power failure and shortages, rising interest rates, increase in cost of doing business and for a number of reasons
but the suspension in the research and development fund and support facility has made industry vulnerable which ultimately will result into a sharp decline in textile exports. Cotton prices surged to a record level of Rs 4,400 per mound in the physical market. Analysts attributed the recent rally in local cotton prices to expected shortage of cotton production across the globe as well as to lower than expected cotton crop in the country this year. Pakistan is the third biggest producer of cotton in the world. As per various estimates, global cotton consumption in 2008-09 is expected to be 112 million bales, 6% less than last year. This expected decline is mainly driven by lower crop estimates from USA and China, fuelling the cotton price rally in the international markets. Indias cotton production has almost doubled this year to stand at 35 million bales. The expected shortfall in global cotton production and Indias ban on cotton exports is pushing local ginners to increase their focus on export market. Likewise, there is no shortage reported in China. According to local traders, cotton prices in the local market are also under pressure due to the news regarding mealy bug attack on crop being harvested in rain affected areas of Punjab and Sindh. The mealy bug attack is expected to bring down the cotton crop below its official target of 14 million bales while independent estimates put the 2008-09 cotton production at around 12.5 million bales. According to textile exporters, with the rising energy costs, textile sectors performance has witnessed a drastic slump in 2007-08 and the current surge in cotton prices is likely to further hamper the sectors exports, and hence its profitability. The expected shortfall in global cotton production and Indias ban on cotton exports is pushing local ginners to increase their focus on exports market but it must be kept in view that apart from expected decline in global production, cotton prices in the local market are also under pressure. The current surge in cotton prices is likely to add pressure on sectors margins and hence its profitability. However, steep rupee depreciation (12 percent against US$ since July 01, 2008) would inflate the top line of textile companies offering some respite from soaring cost pressures. Cotton prices in the country are currently hovering around record levels of Rs4, 100 per mound.
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On the other hand, textile and the other exporters also facing a lot of challenges due to increase in the production cost of the specific export goods, while such hurdles badly affected the Pakistani exporters to meet the challenges and compete in the local and international markets. Exporters are demanding that government should give them facilities to cope with the existing challenges and not get involved in favoritism. Textile sector was backbone of the country's economy, but unfortunately, it has badly suffered due to the poor policies of the Government and government have failed to strengthen this sector efficiently, which not only caused the weakening of the economy, but also caused cut down of the huge amount of foreign exchange.
Pakistan could now be confronted with a severe textile crisis after exports fell 7.80 per cent in US$ past year. Yarn exports continue surging, but sales of apparel, bed linen and cotton fabrics are declining, in bit better sharp contrast with the boom experienced in the first sixteen months without quotas. Rising energy and financial costs would be behind the current difficulties, textile associations said. After surging in the 3rd year of the post-quota era, Pakistani textile and clothing exports are now surprisingly falling. This is extremely worrying for the Pakistani economy that heavily relies on its textile industry. Please see below the numbers of mills, which has been closed, and its a dangerous alarm that what will be happen in the near future!!!
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List of the closed Mills,
Textile Commissioner's Organization LIST OF CLOSED MILLS

FROM .. (1980 - 1995)
DATE of S# 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 NAME of MILLS KAMANI TEXTILE MILLS OKRA TEXTILE MILLS G.M. SPINNING MILLS ITTEFAQ TEXTILE MILLS -1 ZUBTUN TEXTILE MILLS NOORI TEXTILE MILLS ABBASI TEXTILE MILLS JUPITER TEXTILE MILLS AZMAT TEXTILE MILLS ATTOCK TEXTILE MILLS SADIQABAD TEXTILE MILLS SIDDIQUESONS TEXTILES AL-QAIM TEXTILE MILLS ZAFAR TEXTILE MILLS CHAUDHRY TEXTILE MILLS COLONY TEXTILE MILLS HAMAZIZ INDUSTRIES MODIFIL INDUSTRIES N.N TEXTILE MILLS RASHEED TEXTILE MILL 1 UNI SPINNERS LIMITED FRONTIER TEXTILE MILLS HAQ TEXTILE MILLS HARAPPA TETXTILE MILLS AL-AHMED TEXTILE MILLS COFCOT TEXTILE MILLS GHARO TEXTILE MILLS JULLO TEXTILE MILLS KAMAL SPINING MILLS ZAHUR TEXTILE MILLS-1 AWAN TEXTILE MILLS -1 HAMRAZ INDUSTRIES RAHMANIA TEXTILE MILLS 1&2 SPINGHAR TEXTILE MILLS NISHAT PRODUCT LTD NISHAN -E-QADIR TEXTILE INDUS TEXTILE MILLS YASIR SPINNING DANNEMANN FABRICS LTD JAKKEY TEXTILE MILLS LOCATION MANDRA ORAKA MURIDKE SHEIKHUPURA KARACHI NOORIABAD R.Y.KHAN HYDERABAD DHABEJE PINDIGHED MULTAN HUB CHOWKI CHAKWAL JAUHARABAD SHEIKHUPURA MULTAN RAIWIND KARACHI HUB CHOWKI KARACHI KARACHI BANNU KHARIANWALA SAHIWAL NOORIABAD HYDERABAD GHARO LAHORE FAISALABAD CHUNIAN KHARIANWALA MIRPURKHAS FAISALABAD GADOON MULTAN KOTLAKHAT HYDERABAD FAISALABAD ROHRI KARACHI SPINDLE 12480 43200 25108 13740 12500 14400 49384 19376 24864 12480 24880 0 14400 24960 24624 52600 0 0 0 11120 12480 14400 0 12768 0 39600 13200 0 5760 24000 14400 0 24400 14400 0 0 24800 0 0 0 0 1400 0 0 0 1600 0 0 1200 1004 0 864 960 1155 0 0 1800 0 0 0 800 1440 3200 1376 2208 0 0 864 3600 1200 ROTOR 0 0 0 0 0 0 0 0 CLOSED Jul-92 Sep-92 Feb-93 Feb-93 Mar-93 Apr-93 Jul-93 Jul-93 Aug-93 Sep-93 Oct-93 Nov-93 Dec-93 Dec-93 Feb-94 Feb-94 Feb-94 Feb-94 Feb-94 Feb-94 Feb-94 Mar-94 Mar-94 Mar-94 Apr-94 Apr-94 Apr-94 Apr-94 Apr-94 Apr-94 May-94 Jun-94 Jun-94 Jun-94 Jul-94 Oct-94 Dec-94 Dec-94 Feb-95 Feb-95
61
41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68
LATIF SHAKIR TEXTILE SCHON SPINNING MILLS RASHEED TEXTILE MILL-2 TARBELA COTTON MILLS HAMID TEXTILE MILLS HAFEEZ TEXTILE MILLS AISHA COTTON MILLS ATARA TARPAULINE MILLS BIN BAK INDUSTRIES COLONY SARHAD TEX.MILLS DATA TEXTILE MILLS GHAFOOR BASHIR TEXTILE HIMALIYA TEXTILE MILLS J.K SPG MILLS (ZESHAN) MUSARAT TEXTILE MILLS ALI ASGHAR TEXTILE ANNOOR TEX. MILLS HASEEB SPINING MILLS ASMA TEX. MILLS KARIM COTTON MILLS KOTRI TEX. MILLS REGENT TEXTILE MILLS SAFURA TEX.MILS SAJJAD.TEX.MILLS SALLY TEX.MILLS SITARA SPINING MILLS WAQAS TEX (AA TEX0 ZAHOOR TEXTILE MILLS
GADOON KARACHI KARACHI HARIPUR WAN-ADAN MIRPUR KARACHI LAHORE FAISALABAD NOWSHERA LAHORE FAISALABAD FAISALABAD FAISALABAD FAISALABAD KARACHI DHABEJE JHANG KARACHI KOTRI KOTRI KARACHI KOTRI PHAIPHERO JOHARABAD FAISALABAD SHORKOT ORAKA
14400 12624 16400 25296 0 12688 16320 0 52344 28168 14400 15744 13440 14400 0 34000 20880 14400 0 24960 12400 13680 0 17280 39184 18240 12480 14400
0 1000 0 0 960 0 0 1320 360 0 0 0 0 0 1296 0 0 0 1600 0 0 0 1130 0 0 0 0 0
Feb-95 Feb-95 Mar-95 Mar-95 May-95 May-95 Jun-95 Jun-95 Jun-95 Jun-95 Jun-95 Jun-95 Jun-95 Jun-95 Jun-95 Jul-95 Jul-95 Aug-95 AUG AUG AUG AUG AUG AUG AUG AUG AUG AUG
OLD AND OBSOLETTE UNITS

S. NO. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 NAME of MILLS MANSOOR TEXTILE MILLS COOPERATIVE TEX. MILLS KOHINOOR TEXTILE MILLS MOHAMMADI TEXTILE MILLS MULTAN COTTON MILLS MADINA TEXTILE MILLLS GULBERG TEXTILE MILLS FATIMA TEXTILE MILLS AWAMI TEXTILE MILLS AKBER COTTON MILLS CHENAB TEXTILE MILLS CONSOLIDATEED SPG.& TEX FAKIR TEXTILE MILLS PARAS TEXTILE MILLS PUNJAB COTTON KHAIRPUR TEXTILE MILLS LOCATION SHORKOT KHANEWAL LIAQATABAD HYDERABAD MULTAN DHABEJI KARCHI KARCHI KOTRI KARCHI LAHORE LARKANA GUMBAT DERA MAST SHEIKHUPURA KHAIRPUR SPINDLE 12528 25600 28000 12400 12360 10208 11200 19499 12480 24960 23952 12480 15540 24960 12768 26400 ROTOR 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 DATE of CLOSED Mar-80 Dec-81 Oct-82 Jan-84 Apr-84 Jul-84 Aug-84 Nov-84 Aug-85 Jan-86 Jul-88 Jun-89 Jun-89 Jun-89 Jun-89 Sep-89
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17 18
ROSE TEXTILE MILLS BHAWAL PUR TEXTILE MILLS
BHAWALPUR KHANPUR
12480 15200
0 0
Sep-89 Jun-92
CLOSED DUE TO FAMILY DISPUTE

S. NO. 1 2 3 4 5 6 7 8 9 10 11 12 NAME of MILLS CENTRAL COTTON MILLS 1&2 CENTRAL COTTON MILLS 3 CENTRAL CTTON MILLS 4 SHAHYAR TEXTILE MILLS 1 SHAHYAR TEXTILE MILLS 2 FAZAL FIBRES LIMITED TEX. CORP.OF PAKISTAN FIRDOUS SPG.WVG.1 NAVEED TEXTILE MILLS 1 NAVEED TEXTILE MILLS 2 NAVEED TEXTILE MILLS 3 SHAHYAR (DE) TEXTLES LOCATION DHABEJI KOTRI KOTRI KOTRI KOTRI NOORIABAD HYDERABAD KARACHI SHEIKHPURA SHEIKHPURA JHAMKE NOORIABAD SPINDLE 26904 14384 12544 12312 12096 0 12400 14400 12480 24792 20736 0 ROTOR 0 0 0 0 0 1152 0 0 0 0 0 1472 DATE of CLOSED May-92 May-92 May-92 Jun-92 Jun-92 Jul-92 Oct-92 Nov-92 Dec-92 Dec-92 Jul-93 Jul-93
PUBLIC SECTOR UNITS

S. NO. 1 2 3 NAME of MILLS LASBELA TEXTILE MILLS BOLAN TEXTILE MILLS SHADADKOT TEXTILE MILLS LOCATION UTHAL BALEI SHADAKOT SPINDLE 50000 49980 25056 ROTOR 0 0 0 DATE of CLOSED Jun-83 Sep-83 Oct-91
UNIT WITH OLD AND SECONDHAND EQUIPMENT

S. NO. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 NAME of MILLS INTERNATIONAL TEX.MILLS MALIK TEXTILE MILLS MEHR TEXTILE MILLS AJAX INDUSTRIES LTD. TANVEER TEXTILE MILLS AL-AMIN TEXTILE MILLS INDUS SPINNIG MILLS TARIQ COTTON MILLS SILVER COTTON MILLS ALI TEXTILE (JHANG) GRACE TEXTILE MILLS UNIVERSAL TEXTILE MILLS CALICO COTTON MILLS JUNAID COTTON MILLS NOOR TEXTILE MILLS FAROOQ AHMED COTT.MILLS NOON TEXTILE MILLS LAHORE SPINING MILLS ALLIANCE TEXTILE MILLS LOCATION KARACHI HUB-CHOWKI CHAKWAL KARACHI TANDOADAM KOTRI HYDERABAD KOTRI HYDERABAD JHANG CHUNIAN KARACHI KOTRI HYDERABAD KOTRI NOORIABAD BHALWAL BHAIPHETO JHELUM SPINDLE 5376 0 13056 0 23200 0 12048 13056 9440 32696 0 3456 15504 13056 16944 0 16100 12500 33080 ROTOR 672 1240 600 1536 0 2000 0 0 0 0 1680 1400 0 0 0 1200 0 0 0 DATE of CLOSED May-90 Jun-90 May-91 Sep-91 Jan-92 Aug-92 Aug-92 Aug-92 Oct-92 Jan-93 Jan-93 Jan-93 Mar-93 Mar-93 Mar-93 Apr-93 Apr-93 Sep-93 Sep-94
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FROM .. (1996 - 2007)

S. NO. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 NAME of MILLS ZAHID INDUSTRIES ROOMI SPINNING MILLS GHULAM MURTAZA TEXTILE ATARA TARPAULINE AL-FALAH (Ehsan Elahi) YASIR SPINNING (Shahbaz Tex.) AZIZ SPUNTEX LTD. PIONEER TEXTILE MILLS SCHON SPINNING MILLS M.D.TEXTILE MILLS MOHIB TEXTILE (Hashir Textile) HAJI ALLAHDITTA TEX. ANNOOR TEXTILE MILLS ELITE TEXTILE MILLS YAN TEXTILE INDUS. RAYON TEXTILE MILLS NAVEED TEXTILE NO.1(Alay Amin) HAMAZIZ INDUSTRIES KOTRI TEXTILE MILLS MADINA WEAVING MILLS HASSAN AFTAB (Rahmat Wazir) HAFIZ TEXTILE MILLS USMAN TEXTILE MILLS ATTOCK TEXTILE (Spin Tex Ltd.) FEROZ TETXTILE MILLS EXCEL TEXTILE MILLS JAMIA SPG. & WVG. SHAFIQ TEXTILE MILLS CRESCOT MILLS LTD. MODERN TEXTILE MILLS SHAHDADKOT TEXTILE TARIQ INDUSTRIES LTD. KAMAL FACTORY LTD. ELAHI COTTON MILLS NUSRAT TEXTILE MILLS LTD. SIFTAQ INTERNATIONAL CHAUDHRI FIBRES LTD. MUSTAFA SPG. (Alzamin Textile) SIND FINE TEXTILE MILLS JUPITER TEXTILE MILLS LTD. QADRI TEXTILE MILLS LIMITED GLOBE TEXTILE MILLS LIMITED ASAD UMER TEXTILE MILLS AZAM RAZA TEXTILE MILLS LTD. FATEH YARN LTD. LOCATION OKARA MIANCHUNNU JARANWALA KAHNA NAU MULTAN FAISALABAD MUZAFARGAR KARACHI KARACHI KOTKAMOKI MUZAFFARGAR CHICHAWATNI DHABEJI KARACHI MANGA KARACHI SHEIKHUPURA RAIWIND KOTRI BUREWALA JUIANWALA MOR SITE KARACHI KARACHI JAND HUB CHOWKI KARACHI KARACHI KARACHI KOTRI TANDOJAN SLHAHDADKOT SHAH KOT FAISALABAD MANDRA JAUHRABAD NOORIABAD MULTAN KHURRIANWALA SHIKARPUR HYDRABAD BHAWALNAGAR KARACHI SARGODHA LAHORE FAISALABAD SPINDLE 0 0 0 0 1444 0 0 0 12624 0 104280 0 20880 31416 0 0 12480 0 12400 0 12480 16400 0 12480 0 0 0 28000 30296 4490 25056 0 9360 12432 20520 0 0 14400 0 0 12480 478 8164 12480 11600 ROTOR 400 1200 400 1960 0 864 600 1200 1000 1896 0 800 0 0 1400 1728 0 1440 0 800 4400 0 1080 0 3136 3552 1024 0 0 480 0 1400 0 0 0 1536 400 0 1176 0 0 0 0 0 0 DATE of CLOSED Feb-96 Jun-96 Jun-96 Jun-96 Jun-96 Jun-96 Jul-96 Sep-96 Oct-96 Feb-97 Jul-97 Aug-97 Nov-97 Nov-97 Nov-97 Nov-97 Dec-97 Feb-98 Mar-98 May-98 Jul-98 Jul-98 Nov-98 Aug-99 Oct-99 Jun-00 Jul-00 Sep-00 Sep-00 Jan-01 Sep-01 Sep-01 Sep-01 Apr-02 Jul-02 Oct-03 01-Oct Nov-03 Apr-04 Jul-04 Feb-07 May-07 not mentioned not mentioned not mentioned
64
46 47 48 49
IHSAN RAIWIND MILLS PLATINIUM SPINNING MILLS PUNJAB COTTON MILLS. PUNJAB TEXTILE MILLS LTD.
KASUR KASUR SHEIKHUPURA MULTAN
6048 6500 12768 12400
0 0 0 0
not mentioned not mentioned not mentioned not mentioned
TOTAL CLOSED MILLS (1980 ~ 2007) = 169
3.4 Role of Textile Industry in National Economy Textile products are a basic human requirement next only to food. This industrial sector in Pakistan has been playing a pivotal role in the national economy. Its share in the economy, in terms of GDP, exports, employment, foreign exchange earnings, investment and contribution to the value added industry; make it the single largest determinant of the growth in manufacturing sector. Textile share of over all manufacturing activity is 46%, export earning is 68%, value addition is 9% of GDP and as a provider of employment 38%. In spite of the government's efforts to diversify exports as well as industrial base, the textile sector remains the backbone of industrial activity in the country.
Importance of Textile Industry in Pakistans Economy
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Chapter 4: WEAKNESS OF GLOBAL TEXTILE
4.1
Global Challenges, over view
4.2
Pakistan
4.3
India
4.4
China
4.5
Bangladesh
4.6
Vietnam
4.7
Thailand
4.8
Sri Lanka
4.9
Indonesia
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4. WEAKNESS OF GLOBAL TEXTILE

4.1 Global Challenges Over View, Today the Textile Industry is going through the serious operational problems due to increased cost of production, low productivity, poor quality, weak management and poor marketing skills. Hence the Industry is facing serious threats of losing its share in the international markets
Eight major Asian textile and apparel players share many weaknesses creating hurdles to the growth of their share in the international markets. These countries, covering nearly 50 percent of global exports of apparel and 80 percent of Asian apparel exports, have many common problems, including lowprice image, environmental and social regulations, high electricity and fuel cost, dearth of trained manpower, infrastructure impediments and little exposure to high-tech machinery, said a study conducted by a Sri Lankan textiles and clothing sector writer, A H H Saheed, who is also a chartered marketer by profession. These countries are Pakistan, Bangladesh, China, India, Indonesia, Sri Lanka, Thailand and Vietnam.
The study, named Global Apparel Industry and Major Asian Suppliers, has discussed weaknesses of each of the Asian countries dealing in apparel industry separately.
4.2 Pakistan: Major weaknesses of Pakistans apparel industry include low-price image, reliability, marketing, political & peacefully environmental, social regulation and inadequate infrastructure, including power, water and the road network not able to provide foundation for a dynamic industrial sector.
Similarly, very expensive power, low grade technology leading to low productivity and poor quality, outdated machinery, lack of considerable up gradation of human resource skills and confusion in political, religious and social situation, including terrorism.
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4.3 India: In India again low price image is a major weakness like Pakistan and other Asian countries. Besides, buyer hardship and control, environmental and social regulations, narrow export base in garment as over 50 percent is confined to four products, relatively low technology, hardly available traditional tailoring background and automation in decentralized garment sector, inconsistent and low quality and productivity and a higher power cost in Indias power cost also hampering growth there. As per ITMF Study 2003, power cost in India is $ 0.08 per kw that is higher comparing with seven countries, including China, Brazil, Korea, Turkey and the USA. Then Indias cotton yield is only 372kgs per hectare as compared with the world average 900-1000kgs per hectare. Low labor productivity, pro-employees labor laws resulting in unproductive employees union in India, which are mainly externally and politically motivated.
4.4 China: The quota restriction and safeguard measures from the US and the EU are described as major weaknesses of the apparel industry in China. Then wage rates in the apparel industry and other production costs, land prices, training, social fees and shipping costs are rising, Social responsibility/accountability and labor issues, low price image, buyer hardship, mass production/flexibility have been counted as some other major issues in China.
4.5 Bangladesh: Low-price image again emerges as a major weakness in Bangladesh. According to the writer, interest rate for long-term in Bangladesh is very high, that is, 9-12%, as compared with 5-6% of competitors. Similarly, no fund for assistance to textile and apparel sector has been created and when it is coupled with the dearth of trained manpower of international standards and lower labor, the situation is translated into low productivity and inconsistency in quality. Then obsolete production technique, over-dependence on imports, especially woven fabrics, environment and social regulations are few other weak areas in Bangladesh. Particularly, reliability and lead-time in Bangladesh
is high as 90-120 days and machinery is mostly outdated unable to keep pace with technological development. Finally, weak marketing and selling techniques had made impossible for any company to develop a brand or have any new market emerged.
4.6 Vietnam: In Vietnam product quality needs improvement, as technology and machines are 10-20 years old compared with regional countries, that has put the production costs very high something around 5-7 percent compared with competitors China, India, Bangladesh and Indonesia. The country imports fabric and accessories demand of the clothing industry and it lacks fashion design badly. High oil prices and being a non-member of the WTO is again a big challenge for its apparel sector, says the report.
4.7 Thailand: According to the report, most export products of Thailand are commodity types, which are subject to fierce competition and have lower prices. Then the lack of variety and quality products due to shortage of technical manpower and modern technology is resulting in loss of competitive advantage compared with lower cost countries, especially in labour wage rate. The wage rate in Thailand is $1.24 per hour higher than India, Indonesia, Sri Lanka, Vietnam, Bangladesh and Pakistan. Relying on imported raw materials, the domestic industry cannot supply material, especially quality and variety. High cost of production and difficult to get workers is another big issue there. There is a general lack of skilled people, particularly in the sewing industry, so productivity is not high and investments and industrial engineering are limited.
4.8 Sri Lanka: Continued civil war in the country significantly has suppressed the growth potential of the economy and adversely affected investor confidence. The apparel industry there heavily depends on imported raw materials, say 80%, ie, 150 million kgs of fabric are imported annually. The industry has not kept pace with the technological developments. The issue of longer leader times is also
hampering growth there. The need to import fabrics results in longer lead times for the apparel industry. The average lead-time 8 weeks or more and lower labor productivity are big weak areas of the industry. The fall is attributed to lower capacity utilization, high labor turnover, absenteeism and under-trained employees and most factories lacks design and product development,
The domestic market there is relatively small with 19 million people and high electricity and fuel costs besides weak supply chain management are main stumbling block there.
4.9 Indonesia: In Indonesia, political Instability and confusion in the political and social situation, including terrorism, are proving to be major hurdles facing the industry. The infrastructure needs improvement. The rising electricity and fuel costs, increasing trend of minimum wages coupled with low-tech textile and clothing industries is another weak area of the industry. Depreciation in rupiah has increased import costs and oil fuel prices. There is also an increase in the there.
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Chapter 5: FUTURE CHALLENGES
5.1
Introduction
5.2
Power Energy Crisis
5.3
Water Crisis
5.4
Quality Development
5.5
Modern Trends for the Apparel Sector
5.6
Emerging Challenges in Cotton Farming in Pakistan
5.7
Compliances Issues
5.8
H.R. Development
5.9
Post Quota Challenges
5.10
E-Commerce in T & A Industries
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5. FUTURE CHALLENGES
5.1 Introduction, The Textile and apparel is considered the backbone of Pakistans economy. Pakistan ranks fourth among world cotton producers and third among world cotton consumers. With the recent decline in textile exports and a trade deficit of more than $723 million, Pakistans textile industry currently is confronting new economic challenges. Pakistani textile exporters are facing steep price competition from manufacturers in China, India and Bangladesh. Pakistan textile industrys long history of striving for upgrading quality in product and process technology, and more recently, its accelerating globalization to counter the threat of imports into its domestic market, provide insight into deregulation of its industries in the coming years.
5.2 Power Crisis, Power crisis is badly affecting the garments sector, which has already been hit by high inflation, growth decline and monetary crunch.
Government need to take immediate measures overcome and smearing power crisis and electricity and gas cuts to industrial sector, cautioning that otherwise unemployment, reduction in tax, failure in achieving export target would add to miseries of the business community and deepen the economic crisis.
Commenting on the current state of the textile sector, which makes up more than 67 per cent exports of the country, but rising production cost due to nonavailability of uninterrupted power and gas supply to the industrial units, has reduced the production and increased cost of doing business in Pakistan.
Textile sector is contributing a lot for the development of the economic growth of the country but government is not paying due attention to the problems of this significant sector.
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Due to prolong power outages the industry was unable to execute exports orders in hand and was also not in a position to make further commitments with foreign buyers due to inability in the wake of the worst energy crises that Hosiery sector was facing today. They further said that the knitwear apparel export industry, which is already passing through a difficult phase due to internal and external pressures, had been badly hit by the on going electricity crises.
The frequent and prolonged power shut down has crippled this export-oriented industry, which is employing hundreds of thousands of skilled labor force. They said that the law and order situation had also adversely affected our country profile and as a result foreign buyers are not coming to Pakistan.
Pakistan faces severe Power Crisis These days, Pakistan is passing through worst Power Crisis of its history. The trickle down effect of inefficiency and mismanagement of last 9 years is in full flow now and the nation is now reaping what was sown by current regime.
Barely two weeks back, had the good Minister informed National Assembly that the austerity drive has helped the government save 500MW of electricity, to reduce power outage. According to him, the government took effective steps to control power outage including advancing the clock, closure of shopping mall at 2100 hours and reducing the use of air-conditioners and streetlights.
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However, ground realities defy governments statements. Advancing the clock resulted in confusion and now people are using dual clock system. Shopping malls are not complying with closure at 2100 hours and markets remain partially open on Friday and close on Sunday while government announced full closure on Friday, to save electricity.
Also, according to Pakistan Electric Power Company (Pepco), all power generation units across the country are producing much below their capacity, the reason being drastic increase in fuel prices. The government raised oil prices when oil traded at $145 per barrel but prices were not revised when oil sided back to $112 per barrel. As majority of producers use oil as primary mean of power generation, they are badly affected while government is not providing any relief.
The power supply situation worsened in last few week. Unscheduled load shedding of up to 16 hours started across the country. As The News reports: Almost all areas of Karachi were hit by 16 hours of load shedding. Other parts of Sindh including Hyderabad, Qasimabad, Jamshoro, Kotri, Sehwan, Dadu, Khairpur Nathanshah, Naushehroferoze, Qazi Ahmad, Nawabshah, Thatta, Matiari, Sukkur, Larkana, Shikarpur, Jacobabad, Obaro equally suffered from power outage.
Unannounced load shedding in the different cities of Pujab continuing for 18/20 hours unabated, people in Lahore stand extremely vexed by the load shedding and business activities have come to a halt. The protesters in Okara also went violent breaking the windowpanes of Quetta Express at the railway station besides blocking the railway track. Hundreds of people staged protest at Bhawalnagar against 18 hours of load shedding and blocked the BhawalpurManchanabad road. Pakpattan women came out on the streets in protest and forced the closure of shops in the town. The people demonstrated against power outage at Gojranawala, Sialkot, Sahiwal, Sargodha, Faisalabad, Sangla Hill, Kasur and other areas of Punjab.
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In NWFP, Peshawar areas Hashtnagri, Kachchi Mohalla, Lahori Gate, Ganj Gate and other areas people suffering prolonged power outage protested against Wapda, voiced slogans, burnt tyres, pelted stones on passing vehicles and blocked the G. T. Road near Hashnagri for all sorts of traffic. The situation is no better in Swat, Kohat, Mardan, Charsadda, Naushehra, Mansehra, Balakot and other areas of NWFP.
All across Balochistan including Quetta life stands paralyzed due to protracted load shedding. Quetta Electric Supply Company said that they are forced to resort to load shedding in Quetta for 6 hours, in the district headquarters for 8 hours, while in the rural areas for 12 hours. Contrary to the claims of the concerned officials, Quetta several areas witnessing load shedding for 8/10 hours and protracted load shedding at district Bolan, Sibi, Naseerabad, Jafferabad, Khuzdar, Qalat, Mastung, Naushki,
This is high time for the government and particularly the ministry of Water and Power to take power crisis seriously. People of Pakistan are already frustrated with political uncertainty, inflation, raise in petrol prices and street crime. Their patience should not be tested further.
5.3 Water Crisis, The water crisis in certain parts of the country is deteriorating into a critical situation. Pakistan, by the grace of Allah is blessed with countless natural resources, but lacks the planning to utilize them efficiently. This proper planning is vital in view of the country's ever-changing geographical situation, and increasing population. It is unfortunate that the acuteness of this problem has not yet been felt in its true intensity, and that the requisite planning was not done much earlier. Although drinking water is available to most of the urban population during all seasons, there still exists a scarcity of potable water in most remote areas and desert lands throughout the year. The total area of Pakistan is 803,940 square kilometers of which land area is 778,720 sq. km, including 200,000 sq. km irrigated land and 1046 sq. km coastal area. Inexpensive drinking water can be obtained in coastal areas by installing low cost water treatment plants that using solar energy for the
desalination of seawater. The cost of installing such plants is well justified by the decrease in operating costs due to the avoidance of conventional alternate fuels. Some Middle Eastern countries, such as Saudi Arabia, have started to reap the benefits from this abundant natural source of energy. If solar power is made available for the desalination of seawater, the shortage of drinking water, even in far-flung areas of the country (such as barren lands in Baluchistan, and desert areas in Sindh, e.g. Thar) may be eliminated. Pumping seawater to these remote areas, and treating it to convert it into drinking water can accomplish this. Alternately, seawater can be desalinated near coastal areas, and untreated water thrown back into the sea or the salt zone, and the treated water supplied to small towns and villages by pumping stations. This process not only ensures the availability of abundant drinking water, but also provides employment to the locals. The salt obtained from this process can be used in commercial and industrial applications. Pakistan already owns a small experimental desalination plant utilizing solar energy, near Gwader, which is operated and maintained by the Pakistan Navy. This plant was designed and manufactured by the Pakistan Council of Industrial & Scientific Research (PCSIR). The use of treated seawater may, in the future, save many lives in times of drought.
URBAN AREAS
The shortage of drinking water is not as severe in urban areas as in remote areas, except in the summer or winter seasons. The generous use of drinking water and leakage in pipelines and taps are among the major causes of water wastage, amounting to millions of gallons per day. Flushes in toilets and the use of drinking water in gardening also add to the wastage of drinking water. One flush requires about three to four gallons of water. Brackish water or treated sewage water ought to be used as substitutes for potable water for these purposes.
One of the most serious issues related to the water shortage in the country is the mishandling of wastewater from raw sewage, industrial waste, and agriculture runoffs, which increase the contamination in natural sources of fresh water. Sewerage water, therefore, ought not be allowed to fall into the sea or
76
rivers, but should be treated properly, and stored outside the cities or villages to be supplied back to the residents for use. The recycling of sewerage water and its storage outside the cities will raise ground water levels, and the treated solid waste is a natural fertilizer. While recycling sewer water and its accumulation may create water-logging in some areas and increase the salinity of the soil, in most cases (in Baluchistan and Thar, for example) it will raise the water level and result in fertile soil. Water-logging and salinity may be controlled through the use of modern scientific technology. Since Karachi is Pakistan's largest city, its requirements are entirely different from those of the rest of the country. Karachi needs at least 20 million liters of water per day for drinking only, out of the city's total requirement of 600 MGD (million gallon per day).
The main water resources for the city are the Kinjeer Lake, where water comes from the Indus River, and the Hub River where a dam has been built to capture rainwater. The condition of these water resources and the sewage planning needs to be reviewed afresh to minimize the wastage of fresh drinking water. One of these objects may be achieved by removing seaweed and other marine plants and mud from the Kinjeer Lake and the Hub Dam.
This will decrease unnecessary contamination, increase the water capacity, and maintain the depth of the lake and dam. It is even more important to take the sewerage water away from city limits in low-lying areas. An area with low water levels and rocky planes, at least 40-60 miles away from Karachi, along the super highway would serve the purpose. The accumulation of water in that area will serve to raise the water levels, and boost the local economy by enabling the natives to cultivate more fresh produce, especially seasonal vegetables and fruits around the year, using recycled water. Treated organic waste from the sewerage water treatment plants may be used as natural fertilizers for local farms. The use of the latest technology has allowed Middle Eastern countries to use micro and sprinkler irrigation systems, which are particularly beneficial to some seasonal crops and greenhouses. Israel, in particular, has pioneered the development of drip irrigation systems, and has improved this technique with sensors and computer controls that respond to plant requirements rather than
using a predetermined watering schedule. Drip irrigation, however, is an expensive technology and is not suitable for some crops.
INDAH Water Konsortium (IWK), a Malaysian organization, has signed a RM 1.7 million joint-venture research collaboration agreement with University Putra Malaysia (UPM) to conduct research and development (R&D) of the wastewater treatment industry. The five-year research collaboration of IWK with UPM will enable them to improve treatment and management of sewerage sludge. This is a good opportunity for Pakistan and Malaysia to gain mutual benefits by exchanging experiences and views regarding waste water issues. The research and development being conducted in Malaysia can provide Pakistan with vital knowledge in seeking cost-effective solutions.
In the State of Victoria, Australia, Barwon Water is a statutory authority responsible for water and sewage management. Its service area covers 8,100 sq. km, and includes Geelong and the Bellarine Peninsula along the coast to Apollo Bay, and rural areas including Colac. Barwon Water also manages 20 kilometres of the Barwon River through urban Geelong. The Australian government feels that environment protection is of paramount importance in the treatment of the region's sewerage. Coastal treatment facilities have been designed to protect the region's beaches, which are some of the most popular holiday and recreational destinations in Australia.
Barwon Water operates nine sewerage treatment plants. Commissioned in 1995 at a cost of $6.3 million, this land-based system treats sewage from the coastal townships of Aireys Inlet and Fairhaven. Land-based treatment consists of two primary lagoons and a small maturation lagoon. Treated effluent is used to irrigate wood lots on the site. On average, 270 kilolitres of sewage is received each day. Sludge eating bacteria are introduced to the waste water, which then undergoes ultraviolet disinfection, producing a clear effluent, suitable for reuse or ocean discharge. This, Barwon Water's largest treatment plant and the largest plant of its type in Australia, utilises the Intermittently Decanted Extended Aeration (IDEA) activated sludge process to process, on
78
average, 55 million litres of sewerage per day into effluent suitable for ocean discharge or reuse. The sewerage from the Bellarine Peninsula townships of Portarlington, St. Leonards and Indented Head is similarly treated at a plant on 190 hectares southeast of Portarlington. The plant has four treatment lagoons, a pumping station, and a fixed-sprinkler irrigation system. It treats 1.25 megalitres a day which is then used to irrigate more than 100,000 trees on site. Another plant, established in 1981, is a lagoon-based system which treats 0.19 kilolitres a day. A series of treatment lagoons and an irrigation system form the basis of this facility. The plant is on 40 hectares north of the township. About 12,000 trees are irrigated using the treated effluent.
Water Availability Million Acre-Feet (MAF) at Canal Head during 1998-99 Kharif Punjab Sindh Balochistan NWFP Total 37.07 31.93 2.85 0.54 72.39 Rabi 18.94 15.18 1.02 0.70 35.84 Total 56,01 47.11 3.87 1.24 108.23
The cotton crop suffered for a variety of reasons including heavy rainfall in May 2007 causing poor germination in Punjab, high temperature during August and September 2007 causing more shedding of fruit parts and pest attack, especially dangerous mealy bug infestation. Consequently, cotton production declined to 11.7 million bales this year from 12.9 million bales last year thus registering a negative growth of 9.3 percent. The wheat crop was adversely affected by the shortage of irrigation water by 23.3 percent over normal During the current fiscal year (2007-08), the availability of water for Kharif 2007 (for the crops such as rice, sugarcane and cotton) has been 5.5 percent more than the normal supplies and 12.2 percent more than last years Kharif (see below Table). The water availability during Rabi season (for major crop such as wheat), as on end-March 2008 was, however, estimated at 27.9 MAF, which was 23.4 percent less than the normal availability, and 10.5 percent less than
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last years Rabi, adversely affecting the wheat crop, production of which has decreased by 6.6 percent over the last year.
Wheat is a stable food item of Pakistani people, therefore, it is grown in almost every part of the country. It contributes 12.7 percent to the value added in agriculture and 2.6 percent to GDP. Area and production target of wheat for the year 2007- 08 were set at 8578 thousand hectares and 24 for the decline in wheat production this year. Firstly, as a result of delayed start of sugar crushing season and late cotton picking by the growers, the area sown under wheat crop declined by 2 percent. Secondly, the higher prices of DAP (Rs 850 to Rs 3000 per 40 Kgs) discouraged farmers to use more phasphatic fertilizer, thus affecting yield of the crop. Thirdly, shortage of irrigation water by 23.3 percent over normal supplies during Rabi season affected wheat crop. Finally, the incidence of severe frost on early sown crop caused damage in some areas of Punjab and NWFP.
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Efficient irrigation system is a pre-requisite for higher agricultural production since it helps increase the crop intensity. Despite the existence of good irrigation canal network in the Pakistan, it still suffers from wastage of a large amount of water in the irrigation process.
During the monsoon season (July-September, 2007) the normal rainfall is 137.5 mm while the actual rainfall received stood at 125.00 mm, indicating a decrease of 9.1 percent. Likewise, during the winter (January to March 2008), the actual rainfall received was 49.3 mm while the normal rainfall during this period has been 70.5 mm, indicating a decrease of 30 percent over the normal rainfall. The details are in Table 2.13. In order to alleviate water scarcity, the government has given top priority to the development of water resources in order to uplift the agro-economy. About 71.00 billion development budget is being expended in water sector to achieve the objectives through augmentation and conservation means i.e. by construction of medium and large dams and by efficient utilization of irrigation water, restoring the productivity of agricultural land through control of water logging, salinity and floods. Water conservation is being ensured through rehabilitation remodeling of irrigation system and lining of canals. Integrated program approach is being adopted like National Program for Watercourses Improvement in Pakistan and Flood Protection Program
Following major objective were achieved or planned to be achieved by adopting the above-mentioned strategies in water sector during the year 2007-08.
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5.4 Quality development
Quality is a critical success factor in the global competitiveness of Pakistan's readymade garments industry and the country's economy in general. In the textile and clothing industry quality control is practiced right from the initial stage of sourcing raw materials to the stage of final finished garment. For textile and apparel industry product quality is calculated in terms of quality and standard of fibres, yarns, fabric construction, color fastness, surface designs and the final finished garment products. However quality expectations for export are related to the type of customer segments and the retail outlets
Textiles and clothing trade is a vital part of the world economy with many nations heavily dependent on the sector for foreign exchange earnings and employment generation. Today textiles and clothing trade accounts for nearly 6% of total world exports. Many of the least developed and small developing countries have built a huge dependency on the sector, which often accounts for more than 90% of industrial exports and more than 50% of total employment. With increased global competition, many sectors within the textile industry are increasing production efficiency. Research, innovations and development in technical textiles, yarn quality, clothing products, process performance, fabric finishing, coloration technology and marketing can bring significant advancements in the textile sector and market supremacy.
With the complete phase-out of quotas, the Textile & Clothing Sector has been experiencing another global revolution. This trade liberalization process is creating huge uncertainty among textile producing countries, workers and enterprises worldwide. It has increased fears and hopes in both importing and exporting countries. However, it is certain that some countries would benefit from the opening of markets, while others would encounter growing difficulties as a result of increased international competition. The magnitude of gains and losses is a matter of considerable debate. As a result of changing global buyers'
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strategies, there would be considerable consolidation of production, both between countries and within countries.
Growth of world population and the consumption patterns in developed countries has a marked effect on the global composition of trade of textiles and clothing. Which has also undergone significant changes. According to WTO estimates; with the elimination of quotas the total trade of textiles and clothing will exceed the US $ 500 billion mark. The growth will be driven by the clothing sector, which will constitute almost 70% of the total trade. Clothing imports across the board are increasing at a faster rate than textile imports. This pattern is expected to continue.
The apparel/clothing segment is the highest value added link in textile value chain. The dynamics of world trade of apparel and its marketing aspects, as well as analysis of Pakistan's export market and its competitor analysis can be studied more appropriately, Pakistan with total Apparel exports of US $ 2.71 billion in 2003 has a meager share of 1.2% in the global apparel market. In 2004-05 the overall growth in the Apparel exports has been approx. 29%, at the level of US $ 993 million in 2004-05. The growth in the apparel sector of Pakistan has been consistent over, last 3 decades. The Pakistani apparel exporters/manufacturers have kept their focus on producing only traditional products. Product development is considered to be a high-risk activity in the business circles.
Human capital formation for the textile industry development is the most critical area of intervention. In order to achieve high degree of value addition through making the apparel and textile made-ups sector the engine of exports growth, focus has to be laid on structured training programs with the objective to ensure a consistent supply of well equipped manpower. The highest value addition in the textile sector can only be achieved through a rapid development of manpower, equipped with the requisite skills to enable the country compete in international markets. Three major areas that would require organized training in the apparel sector include:
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Apparel Designing:
The apparel sector of Pakistan has relied on re-active marketing of its products. Due to the lack of training facilities and skills to indigenously design apparel products the industry has not been pro-active in marketing its products internationally. Such a strategy leaves a large part of the international garment markets untapped and also inaccessible by the local manufacturers. Only formal training in garment designing in line with the fashion trends will enable the apparel sector to realize its full potential.
Apparel Stitching:
Since the stitching of garments is labor-intensive process the productivity has a strong correlation with the skill and efficiency of the worker. Global studies have estimated that the productivity of Pakistani stitching worker is less than that of Bangladesh, Indonesia and China. To compete with these countries in the global markets, the apparel industry will require training to employ efficient methods of production through worker skill enhancement, wastage reduction and consistency in quality.
Merchandising and Marketing:
The success of an apparel unit is dependent upon the strength of its merchandising and marketing team. The progressive manufacturers and exporters use the services of business graduates to achieve this end. Most of them have to go through on the job-training program for developing basic understanding about the textiles. There is need to develop human resource equipped with business skills and basic knowledge of textiles so as to enable them formulate export marketing plans by taking into consideration the global consumption and demand patterns. There is a huge shortage of facilities to enhance labor skills and produce competent supervisors who have in-depth knowledge of processes and hands-on experience. The existing institutions, which are involved in such training programs, are in dire need of restructuring to up-date their syllabus and upgrade the training equipment.
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In nutshell all the Textile Institutes are facing problems of syllabus/curriculum, getting well qualified faculty members, provision of testing facilities, teaching of quality control methods, environment friendly techniques, shortage of books in the library and shortage of funds for recurring expenses.
5.5 Modern Trends, Challenges for the Apparel Sector Apparel manufacture is an important value-added sector of the textile industry of Pakistan. This sector manufactures and exports ready-made garments, woven as well as knitted, of all types such as trousers, ladies suits, jeans, Children garments, maxies, blouses, skirts etc. Exports from ready-made garments and knitwear sectors crossed $1.0 billion mark each for the first time in the history of Pakistan in 2002-03, contributing about 30.27% to total textile and clothing exports and 52.78% to total value-added exports. The jump in apparel (readymade garments and knitwear) exports from $ 1,723 million in 2001-02 to $2.24 billion in 2002-03 was mainly due to the concessions allowed by the E.U, mainly increase of quota by 15% with effect from 01.12.2001 and abolition of import duty with effect from 01.01.2002. However, with effect from March, 2004, the E.U. re-imposed import duty @ 12%. Currently, textile and clothing exports from Pakistan to E.U. are subject to an import duty of 9.6% because these are more than 1% of the E.U. market for textile and clothing. Consequently, these exports being ineligible for GSP concessions have remained almost stagnant in 2003-04 and 2004-05 at about $2.47 and $2.74 billion. In fact, textile and clothing exports from Pakistan are under severe strain after the commencement of WTO, the World Trade Organization, with effect from 01.01.2005. In contrast, Bangladesh and SriLanka enjoy better access to the E.U. market. The textile and clothing exports from these countries are subject to Zero and 50% of import duty respectively as compared to Pakistans textile and clothing exports. The woven garment units in Pakistan are presently estimated at about 5000. The total installed capacity of these units is about 600,000 machines and annual production is about 700 million pieces. About 700 units are operating in the knitwear sector. The installed capacity is 21,000 knitting machines and
annual production is approximately 550 million pieces. About 80% of these units operate on small scale as cottage industry. Most of these units lack modernization. Under the Textile Vision 2005 policy of the Government of Pakistan (GoP), announced in 2000, garment and knitwear sectors were allocated a sum of Rs 39 and Rs 29 billion respectively for the import of stitching, sewing and knitting machines for Balancing. Modernization and Replacement (BMR) and expansion. The utilization of the allocations was only 15.39% and 35.79% respectively up-till the end of 2003. Furthermore, the textile industry, including the garment and knitting sectors, have lost competitive edge on account of higher cost of inputs in comparison with other regional textile producers e.g., India, China, Bangladesh, Sri-Lanka, Korea, Malaysia, Indonesia and Thailand. Relevant data on comparative costs of some of the inputs is reported as under:
On top of it WAPDA is considering a further increase in power rates on account of rise in prices of furnace oil. The data reported above clearly demonstrate that charges for utilities are much higher in Pakistan than those in India, Bangladesh and China. More-over Bangladesh, China and India subsidies their textile exporters. In Bangladesh, export earnings from knit-wear and readymade garments are taxed at 0.25% only as final settlement of tax liability. Local procurement of yarns and fabrics is subsidized upto 5%. Chinese government subsidizes its textile industry by means of 10% export rebate. The Indian textile industry benefits from 5% interest reimbursement under the Technology Up-gradation Fund Scheme (TUFS). The export earnings in India were exempted from tax to the extent of 30% in 2004-05.
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Because of the lower input costs and subsidies textiles, garments, knitwear and clothing manufactured in Bangladesh, China and India are cheaper than those of Pakistan by about 20 to 30%. Korean, Malaysian and Indonesian garments are also reported to be more competitive in price and quality-wise. The loss of competitive edge by the textile industry in general and apparel sector of Pakistan in particular is mainly due to higher cost of inputs, lack of modernization and non-availability of suitable subsidies from the government of Pakistan. The garment and knitting sectors of Pakistan are in general not fully prepared to face the challenges of the modern trend towards fast changing fashion apparel following changes in the life style of men and women all over the world, especially in the young generation. Some of these challenges are Shorter lead times, Shorter development times, Small quantity of production and quick sales, Just-in-time deliveries and Production of the required quality at competitive prices. It is not possible for the garment sector to adequately cope up with the forementioned challenges without the input of educated and trained manpower of high caliber. The textile institutes and universities must handle the task of producing graduates and diploma holders of the standard required by the garment sector. In order to discharge this responsibility efficiently the institutes and universities must develop curriculum very carefully. In addition to the theoretical subjects, required skills must be made a part of the curriculum usually designated as Apparel Manufacturing and Merchandising. In order to develop these skills the prospective graduates must be assigned hands-on exercises. This technique will enhance the practical capabilities of the graduates for the prospective employers and the need for lengthy training and orientation periods will be reduced. Some of the important skills to be incorporated in the curriculum are listed below:

Knowledge of the fabrics and other raw materials. Production planning and control.
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Implementation of total quality management system as envisaged in ISO 9001/2000, JC Penny System etc.
Knowledge of basic tools used in apparel manufacture. Training of common software and equipment. Cross-departmental training to gain knowledge of the complete processes.
For producing skilled workers for the apparel sectors, the Textile Ministry has constituted a Textile Garments Skill Development Board. At present 450 workers are being trained in 15 big apparel units of Karachi, Lahore and Faisalabad. This is a common technique used in the education system of the U.S.A. for imparting training for skill development in the students. Six-month credit-earning practical are conducted for the students under the supervision of the faculty of the concerned institute or university at the factories of the prospective employers. The institutes and universities in Pakistan with the cooperation of the apparel industry to provide hands-on-training to our students can adopt a similar system: In order to motivate the educated and trained graduates and to progress and better performance, the garment units should implement incentives and rewards systems. Such systems are usually based on performance evaluation involving assessment of the employee efficiency and contribution to product quality and output rate. The incentives and rewards should be in the form of increment in salary, bonus, promotion to higher designation and special allowances. The speed with which the fast fashion apparel reaches the market is extremely important because the consumer requirements can change quickly. In order to meet the challenge of just-in-time delivery, the garment units should develop an efficient supply chain network with the participation of whole sellers and retailers. Feed back from the market will be more efficient and the apparel units will be in a position to plan production of smaller quantities to meet the requirements of the consumers quality and cost of production.
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Its leasers before the National credit consultative council (NCCC) of the State Bank of Pakistan (SBP) recently represented the case of the textile industry. They argued that the textile industry has made an investment of $5.0 billion on modernization and technological up-gradation of its production facilities as well as on expansion during the last five years. In spite of the implementation of balancing, modernization and replacement programs (BMR), the textile industry has lost its competitiveness in the international export market in comparison to other regional textile exporters such as China, India, and Bangladesh, mainly due to higher cost of inputs. They emphasized that the competitiveness of the textile industry can be restored by implementing the incentive package of Rs.50 billion as recommended by the special committee of the Textile Ministry. Salient features of this package are a cut in mark-up rates, devaluation of the rupee and reduced gas tariff for the textile industry, identical to the tariff allowed to the fertilizer industry. However, the Government of Pakistan has approved a revised package of about Rs.25 billion only comprising of the following incentives:
Cash subsidy for research and development (R&D) has been extended for one year at the rate of 6% for garment and knitwear sector, 3% on fabric exports and 5% on home textiles. The R&D work includes market research, design and brand development, innovation and special quality products.
Exemption from payment of ESSI and EOBI contributions. Reduction in export finance rate from 9% to 7.5%. Merger of the machinery imports under Long Term Financing (LTF) with LMM scheme of the SBP and fixing the mark-up on such financing at7%.
The package announced by the GOP has received mixed reaction from the textile industry. Some of the associations of trade and industry are of the view that it is too little and too late. Nevertheless, the relief package of the GOP is expected to facilitate the textile industry in general and the apparel sector in particular to regain competitiveness in the international export market to some extent.
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5.6 Emerging Challenges in Cotton Farming in Pakistan One of the key challenges facing the cotton sector is how to maintain economic viability of cotton farming in the face of globalization, rising competition from synthetics, and increasing input prices and competition for land, water, and other resources from other crops and nonfarm uses. For example, the growth in input prices is higher than the growth in output prices. Thus, an important challenge is how to increase productivity to offset the impact of rising input prices on the economics of cotton farming. Another important challenge is how to minimize the losses caused by pests and weed infestations. How to assess and evaluate the potential of Bt cotton under Pakistans conditions and developments of such cultivars in the country is a further challenge facing the sector. Reducing contamination in cotton and raising the quality of cotton lint is another critical challenge that confronts the sector.
Cost of Production
The principal input costs in cultivating cotton include seed, chemical fertilizers, pesticides, weedicides, diesel, water, and labor in addition to land. Annual data on selected nominal farm input prices along with the cost of production of seed cotton are shown in Table 3.13 from 19901991 to 20042005. There are substantial increases in the prices of all the inputs. Custom hire rate of plowing one acre has increased from Rs 35 in 19901991 to Rs 150 in 20042005, whereas the wage rate has increased from Rs 31 per person-day to Rs 100. The price of seed has escalated from Rs 6/kilogram in 19901991 to Rs 50/kilogram in 20042005. The prices of diammonium phosphate (DAP) and urea, the most commonly used fertilizers in Pakistan, have gone up from Rs 203 and Rs 150 per 50-kilogram bag to Rs 953 and Rs 424, respectively. The canal water rate has increased from Rs 34 per acre to Rs 93 in 20042005. The cost of cultivation reflects changes in input prices
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Prices of important inputs and cost of production of seed cotton
(These data are drawn from various issues of The Pakistan Journal of Agricultural of Agricultural Economics and cotton policy reports of the Agricultural Prices Commission.)
The average annual growth rates in the prices of inputs, the cost of cotton cultivation, and the cost of production are higher than that of the consumer price index (CPI). The average growth in CPI is 7.2 percent. The average growth in the cost of cultivation of cotton is 10.1 percent in Punjab and 12.6 percent in Sindh. The average growth in the cost of production is 10.4 percent in Punjab and 9.6 percent in Sindh. However, the data in Table 3.11 indicate that the average annual increase in the market price of seed cotton has been only 7.5 percent. Thus, cotton farmers are squeezed between increasing input prices and the slower rise in output prices. As a result, the quantity of seed cotton required to buy a given level of various inputs used in farm production has increased, as shown in below Figure,
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Seed cotton required to buy selected input
The real cost of cultivation of cotton has increased by 2.9 percent per year in the Punjab province (average increase in cost of cultivation less change in CPI) and by 5.4 percent in the Sindh province. Nevertheless, the real market price of seed cotton in Table 3.11 has not shown a statistically significant average annual growth (0.3 percent). At the same time, cotton yield over this period has widely fluctuated. In Table 3.3, the coefficient of variation for crop yield is 13.7 percent for all Pakistan, 17.5 percent for Punjab, and 24 percent for Sindh. These developments have adversely affected the income and welfare of cotton farmers. Economic losses due to pest infestation are substantial. They average 10 15 percent in normal years and 3040 percent or even higher during abnormal times. Pakistan has experienced many such losses in recent years. In view of the importance of cotton crops and the implications of production losses to rural incomes and the performance of the economy, it is imperative to develop an effective strategy and adopt all possible measures to arrest and reduce these losses. Effective pest control, inter alia, depends on pest scouting for identification of insects, stage of life cycle, and intensity of attack/infestation (higher or lower than economic injury level), and judicious use of pest control methods. Proliferation of substandard insecticides in the market, aggressive
marketing by pesticide companies, and the farming populations limited knowledge about pest control methods and practices have led to the inefficient use of chemicals and higher costs of cultivation. Farmers over reliance on chemicals and indiscriminate use of pesticides have resulted not only in higher costs of cultivation but also in environmental pollution and the development of resistance in insects against many of the insecticides.
The average cost of plant protection primarily against insects is around Rs 2,800 per acre in Punjab and Rs 1,850 per acre in Sindh, respectively18 percent and 15 percent of gross costs of cultivation. This constitutes the single most important item of out of pocket (tradable) expenditure in cotton farming, as shown in Table 3.14. Farmers spray cotton fields five to six times on average per season and in certain situations the number of sprays may increase to more than 10 depending on weather and the intensity of pest infestation and quality (efficiency) of chemicals being used. Excessive use of chemicals besides polluting the environment has also exposed farm workers in general and cotton pickers in particular to health hazards. In addition, as manufacturing and the livestock feed industry use cottonseed edible oil, residues of pesticides on cottonseed may pose serious health problems.
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Average farmers cost of production of cotton in Punjab and Sindh, 20042005 crop year
Source: Data adapted from APCOMs Price Policy Report for Cotton 2004 2005 crop (APCOM, 2004); figures rounded off.
Cotton is also susceptible to several plant diseases that collectively inflict substantial production losses every year, both in terms of lost production and lower quality of cotton. Although precise estimates of these losses are not available, knowledgeable farmers and others well versed in the crop conditions in the country put such losses at around 1015 percent of the annual harvest on average. In serious situations, as experienced in the wake of the leaf curl virus attack in the 1990s, the losses may be 3040percent.
In spite of heavy losses in cotton production, farmers are not very familiar with the early symptoms of the diseases or are unaware of the possible measures to
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control them. This is perhaps because the pathogens that cause the diseases are not always evident on the plants but may be hidden or underground. The plants may not show early signs of any ill effects of disease but may suffer from an apparent sudden collapse.
Cotton experts in Pakistan have identified the following among important diseases: bacterial blight, leaf curl virus, boll rot, stem rot, wet rot, root rot, wilt, anthracnose, stunting, seed and seedling diseases, Myrothecium leaf spot, Cercospora leaf spot, Alternaria leaf spot, and nematode diseases (Kamal and Hussain, 1988). Of all these diseases, bacterial blight, boll rot, and root rot were generally singled out as the most damaging in Pakistan until the CLCV, which appeared in the 1990s. The CLCV seems to have overshadowed all other cotton diseases in the country, and serious efforts have been made to develop cotton cultivars that are tolerant of or resistant to leaf curl, which caused severe cotton losses.
Weed Control
Another important dimension of plant protection relates to the control of weeds in cotton cultivation. Salam and Soomro (1988) identify the common weeds found in cotton fields in various cotton-growing regions of Pakistan as itsit (Triantberma monogyma), dela (Cyperus rotundus), khabbal grass (Cynodon dactylon), leli (Convolvulus arvensis), bhakra (Taribulus terristris), dhodhak (Eupborbia prostrate), and tandala/cholai (Amarantus viridis). The continuous cultivation in the cotton fields crop after crop without fallowing and following the same rotation year after year have resulted in high weed infestation requiring hoeing, intercultural, and the use of chemicals and herbicides for arresting weed populations to obtain good crop harvests. Weeds not only compete with crops for moisture, sunshine, and plant nutrients but also provide shelter to insects. Accordingly, effective weed control is an important constituent of the good crop husbandry and crop production strategies. The use of chemicals and weedicides and herbicides are increasingly supplanting or supplementing traditional methods of weed control, including fallowing, dab, crop rotation, and interculture. However, as most of the farmers do not have adequate knowledge, background, and training in the judicious use of
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herbicides, their indiscriminate use has not yielded the desired results. The availability of inferior quality and the marketing of substandard herbicides by unscrupulous traders compound the situation. Notwithstanding the increased use of chemicals, weeds remain an important constraint in increasing production and productivity of cotton. The high infestation of weeds and insect pests takes its toll: resulting in increased expenditure on cost of cultivation and loss of output; both in quantitative and qualitative terms leading to inefficient resource use and higher cost of production.
Quality of pesticides/weedicides. Farmers and crop experts in many I and in the press have expressed complaints and concerns about substandard quality and adulteration of pesticides. It has also been pointed out that the quality of pesticides has deteriorated in the wake of local formulation and introduction of generic pesticides. The government has often expressed its resolve to root out the adulteration in the pesticides business. The provincial departments of agriculture have launched periodic, but sporadic campaigns to check the quality of pesticides in the market against substandard products. Nevertheless, because of the absence of an effective institutional framework for the enforcement of quality control, the lack of sustained efforts in this context, and the resourcefulness of the pesticide companies, the menace continues, greatly disadvantaging farmers, wasting resources, and diminishing production. To minimize the quantitative and qualitative losses in cotton production, to reduce its cost of cultivation, and to prevent environmental degradation, the establishment of a network of well-equipped, state-of-the-art laboratories and institutions of quality control standards is a sine qua non.
Bt Cotton
Technological innovations and technical developments, as in other fields, hold the key to improving productivity for increasing farm production as land and water resources face tough competition and encroachments from nonfarm uses. The efficient control of pests has come to occupy a special position in cotton farming as the crop has become increasingly vulnerable to a host of insects and diseases. Biotechnology, acclaimed by its proponents as the technology of the new millennium, has opened new vistas for expanding farm
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production and the development of new crop varieties through genetic engineering. Using this technology, many cotton-producing countries have developed new cotton varieties tolerant of insects. Bt cotton contains a gene, derived from soil bacteria (Bacillus thuringiensis) that protects cotton crop against bollworm by producing a special protein. The bollworms feeding on Bt cotton leaves become sleepy and lethargic, reducing damage to the crop plants. Work on the development of Bt cotton varieties in Pakistan has been in progress for some time. The National Institute of Biotechnology and Genetic Engineering in Faisalabad has developed an insect resistant Bt cotton variety that is being submitted for approval to the National Biosafety Committee under the Biosafety Rules and Biosafety Guidelines enacted in 2005. Under these guidelines, all GM plant varieties intended for release will be required to obtain an environmental clearance prior to entering normal testing and release procedures under the Seed Act of 1976. The Ministry of Food Agriculture and Livestock was reported in April 2006 to have finalized a strategy to regulate the release of GM plant varieties including Bt cotton. Subsequently, in January 2007 the ministry planned to release the National Institute of Biotechnology and Genetic Engineering Bt cotton variety IRFH-901 for use in the next seasons crop.
Pakistan has lagged behind in the development and adoption of Bt cotton. Other major cotton producing countriesthe United States, China, and India have made considerable progress in the development and cultivation of Bt cotton varieties. In India, the Genetic Engineering Approval Committee approved the commercial release of three hybrid Bt cottons in 2002. Because of their higher yield and better fiber quality, which translate into higher cash incomes, farmers are reported to have quickly adopted the cultivation of the Bt varieties. The national average cotton yield in India has increased from 294 pounds per acre in 20022003 to 391 pounds in 20042005, and total production surged from 10.6 million to 19 million bales (Robinson, 2005). It may be premature to ascertain the impact of Bt cotton on Indias cotton production and even worldwide, as the technology is still evolving and in the early stages of development and adoption. However, Robinson (2005) reported that the ICAC had estimated that 27 percent of the world cotton area in 20052006 was
planted with approved Bt cotton varieties, accounting for about 36 percent of total production. In the absence of approved varieties, there is anecdotal evidence to suggest unauthorized cultivation of Bt cotton varieties in Pakistan, which was allegedly smuggled into the country so their origins and the extent and scale of their use are uncertain. However, one thing is very sure: Farmers are not going to wait indefinitely for approval of its cultivation.
Discussions with some progressive farmers and crop experts suggest widespread cultivation of the new cotton varieties in the cotton-growing areas of the Punjab. Visiting Sahiwal around the last week of August 2006, it was astonishing to see tractor trolleys transporting cotton from farms to market/ginneries, as it was quite early for cotton picking to have started in this district. Normally in the Sahiwal district, cotton has been planted from mid-May to mid-June and picking would start sometime in October. On my enquiry, farmers informed me about their early planting of cotton, in March or so. When asked about the pest attack on early-sown cotton, they indicated that the earlysown crop had escaped serious pest attack, as it was a different variety and farmers had already taken two or three pickings. Further discussions with the growers revealed that this was a new breed of cotton variety that had some germs in the plants or leaves that could kill the pests feeding on them. Obviously, farmers did not know precisely about the development of this new technology nor its chemistry but had some vague ideas about its salient features. They were highly appreciative of the savings in plant protection expenditures on this new cotton, which had escaped the onslaught of major pests; and only nominal expenses (Rs 300400 per acre) to control sucking pests had been involved.
By the third week of August, farmers had taken two or three pickings and had picked 2025 mounds (40 kilogram) of seed cotton per acre and were expecting about the same during the remainder of the season. Thus, yield expectations were around 4050 mounds per acre. Cotton was being sold at Rs 11001200 per 40 kilograms in the village, and farmers were quite happy with the income potential.
I visited some cotton fields to have firsthand experience of the situation on the ground. Cotton sown in March appeared to have escaped major pests and bollworms. The plants looked quite healthy, bearing flowers and bolls of various sizes. The boll size also appeared bolder, and plants did not have any pest infestations. Farmers reported that cotton sown in the normal season of MayJune suffered pest attacks due to the onset of rainy season during the growing stages of the plants, whereas early-sown crop, having experienced hot weather in MayJune, escaped pest attack. However, there were some plants with somewhat swollen leaves, as if suffering from some kind of leaf curl virus disease.
In Sahiwal, the cultivation of hybrid maize, after the harvesting of potatoes in January/February has been very successful, yielding 8090 mounds of grains from one acre of maize. Accordingly, potatomaize rotation has become very popular with farmers. Nevertheless, the maize prices had fallen to less than Rs 300 per 40 kilogram in 2006, much less than wheat prices (only 72 percent of the wheat support prices), whereas in previous years maize prices were quite competitive with wheat. As a result, farmers have been disappointed as their input prices have been on the rise. In view of the good revenues from cotton this year and the declining income from maize, some of the maize areas may be switched over to cotton in the next crop season.
Given the importance of cotton to the economy, it is imperative to monitor the new developments and ascertain the extent of the cultivation, yield potential, sources of seed, and characteristics and quality of Bt cotton production. It is also important to take note of the environmental changes, if any, resulting from this new development. Formalizing the system with the release of approved varieties would facilitate its orderly development.
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Contamination-Free Cotton
Small farms undertake a substantial part of Pakistans cotton cultivation on a small scale. Women and children handpick the produce from the cotton plants. In any given location, cotton farmers do not confine their cotton cultivation to one cultivar but grow many varieties. Cultivation of more than one variety is the norm even on small farms. During picking and storage, the different varieties are seldom kept separate. Cotton traders, beoparis, and village merchants purchase cotton in small lots from various farmers. They seldom transport the produce of different farmers of varying grades/standards separately but instead mix various lots in the marketing process.
In many cotton-producing districts, until recently cotton was transported in jute, polypropylene, and plastic bags, resulting in the contamination of cotton with such materials. Other contaminants in cotton have been human/animal hair, bird feathers, cotton twigs, unopened bolls, and leaves. Cotton transportation in open trolley/truck bullock carts has often resulted in catching tree leaves, dirt, and dust. The open storage of cotton in ginneries on unpaved floors has also invited contamination from different sources. Consequently, a high degree of contamination has characterized seed cotton in Pakistan.
As the ginneries rely on old machinery and outdated methods of ginning and traders and the industry have not offered much premium for quality, ginners have been indifferent to quality improvements. Lint produced from contaminated seed cotton has also suffered in terms of quality. The extent of contamination in certain cases was as high as 19 grams per bale. Therefore, until recently Pakistani cotton was rated as among the most contaminated cotton, which adversely affected its price in the international market. To improve the situation and to produce contamination-free cotton, a project was launched in 20012002 in three districts: R.Y. Khan in Punjab, Ghotki in Sindh, and Nasirabad in Balochistan. In the ginneries covered under the project that followed the procedures prescribed by the Pakistan Cotton Standards Institute (PCSI), contamination was reduced substantially, to only 0.74 to 1.97 grams per bale. Because of the importance of improved quality, the program was
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extended to one more district each in Punjab (Bahawalpur) and Sindh (Sanghar) and to the whole of Balochistan in 20022003. The PCSI-trained classers to provide the requisite labor for the program.
However, the Cotton Standardization Ordinance, which was launched with much fanfare in 2002, has not been effectively implemented. The textile industry has not been willing to pay a premium for higher quality produce and this has largely held back progress. To improve the quality of Pakistani cotton and to get better prices in the international and domestic markets, it is imperative to switch to a quality based system of marketing that provides quality premiums and discounts.
Pakistani cotton is all handpicked and has good fiber characteristics. Nevertheless, after ginning, the trash content is still estimated to be around 78 percent on average and sometimes as high as 12 percent. In comparison, the trash content is up to 30 percent in the machine-picked cotton as in the United States, but when ginned and packed it is only 24 percent. Until recently, the trash content in Pakistan cotton averaged 2540 grams per bale, which is very high. To help control this situation, the use of jute bags in the cotton trade has been banned, which has generated good results
Industry losses due to cotton contamination, 2004 2005
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High contamination in the local cotton a scourge for textiles,
Pakistan, the worlds fourth-largest cotton producer, had to import nearly 4.7 million bales last year after production in the 2007-08 crop year fell to 11.6 million bales against a target of 14.14 million. The countrys cotton output in the 2008-09 crop years is likely to be less than 12 million bales, falling short of a target of 14.1 million. The decline in cotton yield and area under cotton cultivation, pest attacks and a shortage of fertilizer were the major factors that hit production in the 2008-09-crop year.
According to ITMF study on global development of cotton contamination, the percentage rate of cotton sources contaminated with foreign parts has continuously increased from 14% in 1989 to 22% in 2007.
As ginning factories fail to upgrade their quality and government campaign to create awareness about cleaner cotton among farmers also faltered, the Pakistani exporters continue to pay penalty worth millions of dollars on defective products produced from contaminated cotton.
A study revealed that the spinners employ a large number of manual labors in their factories to remove any foreign material from cotton before it goes for spinning the yarn. Furthermore, they also install expensive cotton contamination detection systems at the blow room. This results in an increase in their cost of production, this cost, however, is much lower than the penalty they have to pay if a contaminant during spinning process is spun and integrated in the cotton yarn and then into final woven or knitted fabrics.
The contaminated portion might not be detectable in the yarn, but it has different dyeing characteristics. It is detected when the dye shade on the contaminated portion is different than the rest of the cotton yarn or fabric. This contaminated portion might reappear in the yarn or fabric at regular intervals and spoils the quality of the product. The foreign buyers lodge and get a claim depending on the percentage of damage on the product. Although foreign matter detection is routine in spinning
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mills, the PP (polypropylene) cleared yarn is becoming the prerequisite for a high quality standard among buyers and now many buyers specifically demand yarn cleared from PP from their suppliers.
According to the experience of a Swiss machinery manufacturer, every fifth machine stop during sectional warping and beam warping is caused by PP contamination. Polypropylene (PP) and other synthetic foreign matter that is transparent and identical in color with cotton/wool can hardly be recognized with conventional, optical foreign fiber clearing. To solve this problem, a sensor is developed to detect synthetic foreign matter independent of the color of the yarn and of the foreign matter, for example white and transparent polypropylene in raw-white yarn as well as finest foreign fibers.
Basic textile exporters say they have to suffer losses of millions of rupees because of high contamination in the local cotton in addition to incurring substantial expenses on machinery meant for detecting impurities in the lint and removing them.
Pakistan produces one of the best cotton in the world. This natural gift of the Nature is polluted with various contaminants. Foreign fibers made of white or colorless polypropylene still present a massive problem for the cottonprocessing industry. Other contaminants include bits and pieces of jute bags and polypropylene bags. The cotton also gets contaminated with hair, shopping bags, when thousands of small farmers bring the commodity at the doorstep of wholesalers in the cotton markets. In some cases sand and moisture is also added in the cotton accidentally or by design to increase its weight.
Cotton is the most important crop in Pakistan and livelihood of millions of people (directly or indirectly) depends upon its successful cultivation and processing. There has been considerable improvement during last few decades in increasing yield per unit of land and improving agronomic properties, especially fiber quality. However, both yield and fiber quality is still below international standards.
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In order to maintain cotton standards in Pakistan and to ensure production of contamination free cotton, Cotton Standardization Ordinance was promulgated on October 4, 2002. Pakistan Cotton Standards Institute PCSI has been given a central role under the Ordinance to set cotton standards in the country. Therefore, the implementation of standardization and Grading System at the grass-root level is vital for the promotion of contamination free and clean cotton in the country.
5.7 Compliances Issues Executive Summary: Compliance is either a state of being in accordance with established guidelines, specifications, or legislation or the process of becoming so. We are living in an age where buyers are not only interested in products it, but they also want to have full information on details in the process. The new world of international trade is very conscious of ensuring the well being of the stakeholders associated with business. This includes buyers, suppliers, employees, and the community, as a whole. Now a days the importers of textile products in the developed countries demand that the goods they buy should have been manufactured in textile mills which fulfilled social obligations as envisaged in the relevant ILO conventions which have been accepted and signed by Pakistan. Social compliance is therefore mandatory for the industry in general and textile industry in particular.
In post WTO era, sectors of Pakistani economy particularly industry, agriculture and services are increasingly exposed to various challenges. One of the major challenges for low-income countries towards adopting the path of sustainable development is the limited enterprise capacity to comply with the international buyers requirements. International buyers are increasingly demanding compliance on quality, safety, environment and social standards.
Compliance to international and national standards promotes enterprise efficiency and competitiveness through international trade, protects consumers rights of health and safety and in turn leads to socio economic development of
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economy. Non-compliance to these requirements often results in loss of business.

Social Compliance Issues
Although the Uruguay round addressed the issue of Technical Barriers to Trade by introducing the Agreement on TBT, but still it provides sufficient room to impose quality standards, both product specific and process specific. Foreign Buyers provide their code of conduct and the local Textile Industry has to make compliance of their standards. The auditors deputed by the foreign buyers verify the implementation status to qualify trade relationships. Mostly the issues are derived from local and international Labor Laws Health and Safety Standards and Environment Standards viz.
1. Child Labor 2. Forced & bonded labor. 3. Harassment and abuse 4. Health & Safety 5. Trans-shipments quota 6. Verifications 7. Collective bargaining 8. Security concerns 9. Compensation and benefits 10. Custom compliance 11. Working hours. 12. Drug interdiction 13. Discrimination 14. Country of origin
Thus, slowly and steadily compulsion is taking form of business advantage.
The agreement on Technical Barriers to Trade (T.B.T.) in WTO clearly says that market access can or should only be restricted through imposition of standards based on scientific findings and rationale. Practically the developed countries are at freedom to immediately impose trade
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restrictions even to investigate a particular case or an export consignment. Over the past few years the developed countries that have put extra pressure on the firms in under- developed countries to comply with environment & health standards have adopted numerous measures. There is need to develop awareness amongst all the stakeholders about the Social Health - Safety and Environment related issues, the local & international laws and a commitment to comply with required standards. The Government Depts./Ministries/Institution have to synergies their thinking policies & action plans to meet the up coming global requirements and develop clearly spelled out laws facilitating industry to become compliant to W.T.O./ILO regulations on one hand & remain as competitive global player on the other. The industry mostly exists as SMEs and is likely to face difficulties in complying with social and environment regulations. These SMEs are not in a position to comply with any of the present local Social Environmental Laws, because of their existing contractual system of production to achieve productivity levels. Similarly the processing industry also is unable to meet the high cost compliances.
Why is it important for an enterprise to have compliance certification?
Compliance to international standards on quality, environment and social accountability has been universally recognized as one of the key strategic elements of product competitiveness in both domestic and international markets, along with price and delivery factors. Quality is the pre-requisite for successful market access and for achieving continued customer satisfaction. The Standards and Quality Management program address the quality related needs of exporters and concentrate on institutional and capacity development in the export quality management.
Companies use international standards that either want to implement their own in-house systems or to ensure that suppliers have appropriate systems in place. International standards promote international trade by providing one consistent set of requirements recognized around the world.
These systems and standards define and establish an organization's policy and objectives. It also allows an organization to document and implement the procedures needed to attain these goals. A properly implemented systems ensure that procedures are carried out consistently, that problems can be identified and resolved, and that the organization can continuously review and improve its procedures, products and services.
For example, ISO 9000 quality management system can enable your enterprise to increase profitability and customer satisfaction through reduced waste and rework, shortened cycle times, improved problem tracking and resolution and better supplier relations. The primary value of this certification is consistent delivery of a product or service to a defined standard and improved bottom line performance. It results into perceived higher quality product/service. The standards are voluntary or are required by the buyers. ISO certification also has a significant bearing on market credibility as well. Enterprises wishing to do business in Europe may have no choice but to adopt it as it is an accepted part of doing business.
How much does a certification cost to a Company?
The certification firms give quotation of their services in regard of any certification considering the following factors
Size of organization Number of employees Complexity of situation Complexity of site.
Certification cost may range from Rs. 50,000 to Rs. 300,000. Moreover, consultancy services for certification if required may cost ranging from Rs. 100,000 to Rs. 300,000 depending upon the above-mentioned factors. Consultancy may not be required if the staff is competent for carrying out the requirements of implementation of a standard.
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The major certifying bodies working in Pakistan
Moody International (Pvt.) Limited 4 H-Annexe, Gulberg II, Lahore, Pakistan Tele#: +92-42-5872172-77, Fax#: +92-42-5872179-80
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Bureau Veritas Certification H. No. 43, Block 7/8, Jinnah Cooperative Housing Society, P.O. Box. 3829, Karachi Tele#: +92-21-111786-013, Fax#: +92-21-5876765, 4392713 www.bvqi.com
SGS Pakistan (Pvt.) Limited, Systems & Services Certification 22/D, Block 6, PECHS, Karachi-75400, Pakistan Tele#: +92-21-4540260, Fax#: +92-21-4548824 www.sgs.com.pk
Pakistan Systems Registrar 119/II, Popular Avenue, Phase-VI, Defense Housing Authority, Karachi75500 Tele#: +92-21-5801372-3, 5886024, Fax#: +92-21-4548824, 5889024
System Certification Centre of PSQCA http://www.psqca.com.pk/System Certificate Center Introduction.html
DNV www.dnv.com
AITEX www.aitex.ex
TUV www.cert-int.com
Consultancy Firms offer services for compliance in Pakistan
SGS www.sgs.com.pk
PIQC Institute of Quality www.piqc.com.pk
BUREAU VERITAS www.bvqi.com
URS www.urscertification.com
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5.8 H.R. Development

Overview
Unfortunately this has been an area of neglect by successive governments over a long period of its history. In fact, this underdevelopment of human capital is the single most daunting challenge facing Pakistan at present. Unlike other countries in the region, which have moved to middle category of human development, index (HDI) Pakistan continues to remain stuck in the low category. High population growth - one of the fastest in the world has given rise to a young dependent population and increased unemployment among the youth. One half of the population is illiterate making it more difficult to impart new skills to the ever-burgeoning labor force. The mean years of schooling remains quite low and has displayed only minor improvements over time. On the other hand globalization imperatives dictate that the level of schooling and skill formation should be moving up the curve at a fairly rapid pace. Poor health status of the majority of the population encourages absenteeism and results in low labor productivity. Pervasive poverty and inequitable distribution of income and assets have allowed the benefits of economic growth to be concentrated in the hands of a small minority of elite generated social and regional inequities and depleted social capital. Political instability, religious extremism and sectarian violence in Pakistan can also be ascribed, to some extent, to poor human development attainment. Gender disparities in Pakistan have also been a major contributory factor to the underdevelopment and underutilization of human resources. Every single indicator mean year of schooling, literacy ratio, emolument rates and participation in labor force show a vast difference among the males and females. This waste of human capital can be harnessed into a potential source of productive capital under a proper set of policies and incentives.
Human Resource in the Textile Industry
Human capital formation for the textile industry development is the most critical area of intervention. In order to achieve high degree of value addition through making the apparel and textile made-ups sector the engine of exports growth, focus has to be laid on structured training programs with the objective to
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ensure a consistent supply of well equipped manpower.

Current Status of Human Resource
Work force in the textile industry can broadly be classified into four main tiers, unskilled labor, skilled labor, operators and supervisors and the middle level management including production and operations managers. According to estimates the textile industry as a whole provides employment to around 1.4 million individuals, constituting around 40% of the employment of manufacturing sector in Pakistan. The sector-wise employment estimates are slightly under estimated due to the reason that a number of process vendors are also associated with the textile industry. Actual number of employment will be within the range of 1.4 million to 1.6 million. A greater portion of the employment is generated by the stitching segment, which constitutes almost 55% of the total employment and rightly so as this is the most labor intensive process in the whole textile value chain.
Employment in Textiles
Importance of Labor Skills in Textiles
The skill requirement varies from sector to sector in the textile industry depending upon the nature of the technical process and the level of complexity involved. Usually the role of supervisors and operators is of critical importance in the capital intensive sub-sectors like spinning, knitting, shuttle-less weaving and processing, whereas the skilled labor has a pivotal role in labor intensive processes like stitching and power-loom weaving.
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Major Issues in Human Resource Development
Lack of Skill Development Facilities
As mentioned previously, the labor force receives on-the-job training in almost all the sub-sectors. A number of institutes have been established which cater to the industrial requirement for middle level management. There is however a huge shortage of facilities to enhance labor skills and produce competent supervisors who have in-depth knowledge of processes and hands-on experience. The existing institutions, which are involved in such training programs, are in dire need of restructuring to up-date their syllabus and upgrade the training equipment.
Standard of Training
The textiles industrialists believe that the standard of the training programs carried out by these institutions are not commensurate with the requirements of the industry. The reason for this is lack of coordination between the institutes and the industry. The success of such institutes depends upon constant interaction and an effective feedback mechanism between the two. It is for this reason that most of the public sector initiatives established in isolation from the industry has been are unable to deliver.
Lack of a Training Culture
The industrialists consider training as an unnecessary expenditure on their workforce, which ultimately causes problems for them to retain their labour and managers. Hardly any textile industrialist in Pakistan invests in training of its human resource. Lack of good quality training facilities in the country also provides the industrialist with an additional excuse not to invest in human resource development.
Absence of a Quality Assurance System
There is no system to evaluate the performance of the training institutes in the country. There exists wide discrepancy in quality of education provided by different institutions, even in the same subject. Absence of a quality assurance
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mechanism is the main cause of deteriorating education standard of a majority of textile institutes.
Role of Industry Associations
The Export Promotion Bureau has established some training facilities in collaboration with the industry association. The Funds for such projects are provided from the Export Development Fund (EDF), which is collected as a cases from the exporters. However the decision on establishing new institutes should strictly be based on an in-depth training need analysis of the industry as some of the associations stress upon the Government to establish these institutions without a need.
Training of Trainers
It is important to mention here that bringing in new equipment in these institutes is not the sole solution to the problem since it is likely to have significant effect on the human resource development for the textiles industry. These institutes need overhauling of all the major areas, most important of which is the training of the trainers, which has been ignored through out the evolution of the textile industry. The academia in the institutes should be trained and familiarized with modern methods of education. It would not be incorrect to say that the trainers are required to brush-up their knowledge so as to keep abreast of the modern developments in their respective disciplines.
5.9 Post Quota Challenges

Pakistan Knitwear Industry: Post Quota Challenges
A large number of knitting units have stopped production due to ever increasing cost of inputs in the country. Exports of value-added textiles have been seriously affected as a result of the end of textile quota regime and severe competition from India, Bangladesh, China and other countries faced by the exporters of Pakistan, the reason being subsidies being offered by importing countries to them as well as incentives offered by their own Governments. Since the industry had been facing numerous problems in production, such as technological developments, change in policies and macro-economic factors,
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social issues in the industrial markets and shifting market structure of the world textile industry
Textile and clothing industry is the most important sector of the Pakistan economy. This sector is the main force behind exports and employment. The knitwear is playing an essential role in value addition in the Textile sector. During the year 2005-06 total exports from Pakistan was US$ 1.75 billion which was almost 12% of national foreign exchange. The use of knitwear has increased largely due to its low price as compared to cotton and blended cloth shirts. It is a convenient wearing apparel and easy to wash. Knitted garments are popular among all over the world, especially in the developed countries, due to their inherent qualities like softness, coolness, sweat absorbent and durability.
According to estimates of Pakistan Hosiery Manufacturers Association current production of knitwear is at the level of 1.1 billion pieces. Out of this production, 60% comprising jersey, knitted fabric, T-shirts, sweat shirts, polo shirts, jogging suits tracksuits and children outer wear. USA and the European Union are the two largest markets for garments and knitwear products. Apparel is a rapidly changing business with very short product life cycles and consumer preferences. The major thrust of garments and made-ups exports from Pakistan is on the US market. The European Union is the second largest market for garment manufacturers from Pakistan. Major markets that Pakistani manufactures have so for not been able to explore are the Japanese, Far East and Middle East markets. These markets demand high product standards and in return offer higher unit price realizations.
The production of garments and made-ups in Pakistan is concerted mainly in Lahore, Faisalabad & Karachi. In Lahore all major units are vertically integrated & are involved in knitting, dyeing, finishing & stitching. Major reasons to set up vertically integrated units are the desire of the manufacturer to have full control over all the processes involved and to ensure that right products are delivered at the right time. Specialized and commercial units have not been successful to position themselves to cater to the needs of the export oriented garment industry.
Knitting industry is growing at a rate of 15% to 17% annually. In the absence of proper planning and focused approach towards emerging world textile scenario the local industry foresees a turbulent and a disastrous era beginning in 2007 when China fully avails WTOs quota free benefits as at present it is being restricted at a growth of 8% per annum. The huge investment of around $6 billion made during last few years, but this investment did not generate the much needed employment in the country as most of the investment went into spinning, weaving or investment made by large industrial groups. This investment did not go to value addition sector which is also the biggest job provider to skilled and semi-skilled work force, including women.
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The knitwear industry has developed rapidly in recent years. At the start of the 2000s there have been new investments in the knitwear sector especially in and around Lahore. Ammar, Klass textile, Ibex, Irfan, Style, Azam, Disco, Crescent Group, Regent and Saigol Groups, based in Lahore, have set up most modern production units for knitwear with state of the art technology. Improvement made during 1990s in knitting technology and techniques in the processing and finishing have been further improved with dimensional stability of knitted fabrics. Some high quality machine manufacturers have also imported soft flow dyeing machines and tension-free dryers. The locally manufactured machinery is also supplemented with liberal imports under different modes and export oriented capacity is being developed to earn much needed foreign exchange. Limits of shrinkage have also been narrowed. These advancements, together with availability and use of soft twisted spliced yarn have resulted in the upsurge of worldwide consumption of knitted fabrics. The knitting technology is a unique and distinct part of the textile industry. In general, textile mills, which manufacture knitted fabric, do not manufacture woven cloth. The distinctive feature of knitting industry is that it comprises highly specialized machinery and technical skills required to produce various type of knits: for example machinery used to manufacture sweater bodies cannot also be used to make hosiery, even though both are knitted products.
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Pakistan imported large numbers of automatic flat knitting machines of different brands. Import of flat knitting machines into Pakistan increased from 857 numbers valued Rs128.1 million in 2002-03 to 2,235 numbers valued Rs312,387 million in 2004-2005. However, during the year 2005-06 import of flat knitting machines decreased to 84% in terms of value. Import of flat knitting machines into Pakistan is given in Table-1 and country-wise import of knitting machines is given in Table-2. At present there are about 1,5000 knitting machines working in the country to manufacture 1.1 billion pieces if knitwear with approximately 60% capacity utilization. The sector is not only catering for domestic demand, but also has export potential. There is great reliance on the development of this industry because of high value addition content in the form of knitwear.
The products made in Pakistan include T-shirts, jogging suits, jerseys, sport shirts, children wear, gloves, tracksuits, sweaters, socks, etc. The use of knitwear (Hosiery) has increased primarily due to its low price, as compared to
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cotton and blended shirts. It is a convenient wearing apparel and easy to wash. It requires no vest or under garments due to its inherent absorbent quality. Knitwear goods exported from Pakistan are known for their fine quality in European and American markets. A series of new finishing processes have been incorporated with improved shades, texture and luster. Some of the bulk export items, which have gained popularity, are 100% cotton T-shirts, vests, slips, childrens pajama suits, sports shirts, undergarments, bathing suits, knitted garments and knitted tabulator or flat fabrics. Manufacturers follow international sizes and specifications. They also welcome buyers samples, specifications and designs. Export of Knitwear (Hosiery) increased from 40 million dozens worth $911 million in 2000-01 to 79 million dozens worth $1,751 million in 2005-06. Export of knitwear is given in Table-3. In the international market the USA is the major buyer, followed by UK, Germany, Netherlands, Italy, Canada, France and Belgium. Country-wise export of knitwear is given in Table-4
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Challenges: Pakistan textile industry is loosing its competitiveness in international market. Buyers get a low quality service, which reduces their confidence to do business with Pakistani industry. As such, Pakistani industry could neither meet the lead time demand of highly profitable textile and fashion products nor could meet the low price expectation of Western markets. Despite having state of the art machinery and access to capital, our textile industry is compelled to manufacture and export raw, non-seasonal and low value textile products where high capital is required to manufacture at extremely low margins.
China, India and Bangladesh are strong competitors. In China industrial cities have grown up, in Bangladesh cash subsidy of 10% is normal plus the industry is getting incentive for conversion. Sri Lanka built image through its GS. India has added 14 million spindles in last two years, 5 million spindles have been installed in Bangladesh where no cotton is grown, expansion of Chinese textile spinning capacity than twice that of India.
Challenges ahead for the industry are search for new markets and product segment is non quota countries and other unexplored areas, maintaining international quality standards, etc. China is the major threat: about 40% of its total export goes to Japan, which is a non-quota country. The two major challenges are low level of technology and modernization in textiles and clothing of Pakistan, which includes the knitwear sector.
As no proper research work has been undertaken, the role of R&D is very much lacking as there is not much research activity in the textile sector. The only one Textile Industry Research & Development Centre (TRIDC) set up with UNIDO assistance by the Ministry of Industry, Government of Pakistan, was closed down some years back. No textile association has own its research institute. In India all major associations have their own research institutes, such as the BITRA in Bombay, ATIRA in Ahmedabad, SITRA and Jute Industry Research Institute (JIRI) in Calcutta. The other Challenges are given as under: Frequent fashion changes.
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Anti dumping policies imposed by major importers. Non tariff barriers may increase such as standards relating to child labor, human rights. Comparatively poor image of Pakistani brands aboard. Poor presence in non-quota countries and niche markets. Increasing wage rates in other ASEAN & Asian countries. China under quota system till 2007 Government bureaucracy and reactive nature. Under-developed weaving sector and unorganized processing units. Lack of international marketing efforts. Higher rate of interest on loans for modernization and expansion. Less awareness in acquiring international quality certifications.
5.10
E-Commerce in T & A Industries,

Introduction
The overview of e-commerce activities in the textile and apparel industries, we begin with a brief look at the current competitive landscape in the bricks and mortar. Apparel industry, highlighting the changes that have occurred over the past decade as retailers have adopted. lean-retailing. Business models in response to increased product proliferation and shorter product life cycles. With the advent of the Internet, apparel sales have started to move on-line. To understand how the pattern of growth of on-line apparel sales might differ from that of other products, we outline some of the critical ways in which the apparel purchase decision differs from the purchase decision for other consumer products, such as books and compact disks, which have experienced rapid growth in on-line sales. In view of these differences, we characterize some of the new technologies and business practices that are being developed to facilitate on-line apparel purchasing.
The paper then focuses on business-to-consumer (B2C) business models that have emerged to sell apparel on-line. We.ll explore a range of B2C business models, from the introduction of new .pure-play. business models to the
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development of on-line strategies by incumbent brick and mortar retailers, catalog companies, and apparel manufacturers, highlighting some of the challenges relating to channel conflict and supply chain management that incumbent firms face as they enter into the world of apparel ecommerce. We then turn to an analysis of business-to-business (B2B) models that are beginning to surface, concentrating on the potential benefits of these models to the operations of the textile-apparel-retail supply chain. We also discuss some of the different models that are emerging, and how they are related to differences in channel power.
The Internet has already affected the world of apparel and textiles. Driven to provide consumer convenience, the majority of apparel manufacturer and retailers have created a virtual version of some aspects of their current physical environment. A few apparel manufacturers and retailers have used the internet to go beyond their existing offerings, providing the consumer with a valueadded internet experience such as customized on-line apparel catalogs and custom-fit clothing. However, the potential impact of the internet on the consumer, and on the industry, lies not in what the consumer sees and does on a computer, but in how retailers and manufacturers leverage the internet to meet both expressed and latent consumer needs. The technology now exists to reinvent the textile-apparel supply chain to provide consumers with what they want, when and where they want it. The barriers to implementation lie more in the willingness of the members of the supply chain to redefine their policies and practices to take full advantage of the Internet technology.
Industry Background
The apparel industry can be segmented in several ways that are useful for trying to make sense of the different business models that characterize the industry. Cost is one basis for segmentation. A large segment of the apparel industry competes on cost. To achieve rock-bottom costs, manufacturers typically pursue production in low-labor cost countries and endure the long lead times that usually result from low-cost transportation. (The single-minded
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pursuit of low costs in general results in longer lead times, since firms try to minimize costs by manufacturing and shipping in large lot sizes). Lower cost clothing is typically sold through mass merchants (such as K-Mart and WalMart).
Firms in the industry choose to sustain increasing costs in order to obtain better quality (look, feel, fit and durability) or more. fashionable. goods. The degree to which garments follow the latest trends and fashions (that is, how. fashion forward. the garment) is the basis for a second type of industry segmentation. Garments can be roughly classified as basic, fashion-basic, or fashion goods depending on the length of the product life cycle and the degree of demand unpredictability for the garment. (See Exhibit 1.)
Exhibit 1: The Fashion Triangle Source: A Stitch in Time, Oxford University Press,
In recent years, fashion attributes have infused nearly all garment types: product life cycles are shortening and product proliferation is accelerating even in the most basic garments. These trends have engendered increasing demand uncertainty that has changed radically the basis of competition in the textileapparel-retail channel. Increasing demand uncertainty has led to the advent of .lean retailing:. retailers who once purchased large quantities of each item far in advance of the selling season now avoid the risk of carrying inventory of
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increasingly unpredictable items by ordering smaller quantities of each product in advance and ordering, on a weekly basis, replenishment quantities of those products that have sold in the previous week. The forces driving lean retailing are summarized in Exhibit.
Exhibit: Forces driving lean retailing
Lean retailing has driven changes in both information and product flow, resulting in the changes in manufacturing and logistics practices indicated in Exhibit 3 below. Exhibit 3a shows the structure and dynamics of a more traditional channel, designed primarily to minimize production and distribution costs. Exhibit 3b depicts the channel associated with lean retailers, designed to lower the risk of delivering a plethora of apparel products to retail. Lean retailing practices have in many ways paved the way for e-commerce, by requiring and exploiting the use of various critical technologies, streamlining the supply chain, promoting information exchange in the supply chain, and requiring smaller quantities of products to be manufactured and shipped in response to actual consumer preferences.
Exhibit 3a: Channel Structure: Traditional Retailer-Supplier Dynamics
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Exhibit 3b: Channel Structure: Lean Retailer-Supplier Dynamics Source: A Stitch in Time, Oxford University Press,
Lean retailing has been facilitated greatly by the introduction and maturation of several key technologies:
1. Product identification using bar coding and point-of-sale scanning, used to provide immediate, accurate information on which products have sold;
2. Electronic data interchange (EDI), used by the retailer to place replenishment orders quickly and accurately; and
3. More sophisticated, often automated distribution centers, which allow manufacturers to pick and pack small replenishment quantities based on EDI orders.
As noted above, these technologies, and the business practices associated with them, form the underpinnings for many of the critical technologies and practices required for effective implementation of e-commerce strategies.
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Distinctive Aspects of the Textile and Apparel Industries:
Factors Affecting E-Commerce Adoption, A number of distinctive aspects of the textile and apparel industries provide challenges to the implementation of electronic commerce.
First, and perhaps most important, is the difficulty of accurately characterizing the product on-line. Many of the characteristics of a garment that are pivotal in the consumer decision-making process -- color, touch and feel, and fit -- are difficult, if not impossible, to communicate virtually. Moreover, unlike books, music, and consumer electronics, the difficulty in describing the product cannot be offset easily with customer reviews, reviews by industry experts, or comparisons based on independent performance evaluations. (Although for online purchases, like catalog purchases, brand names help consumers infer certain aspects of quality or fit, especially for consumers making repeat or replenishment purchases.) These obstacles likely will act more as a deterrent in the B2C segment of electronic commerce than in the B2B segment, since industry standards for characterizing color and fabric will be more familiar forms of communication for business partners than for individual consumers.
Compounding the difficulty in characterizing the product is the personal, often emotional nature of an apparel purchase. Apparel purchasing decisions are closely linked to individuals. Feelings about themselves, their body image, and the image they wish to project. Clothing is the .skin. a person chooses to wear to project his or her self-image to the public, and hence is intimately tied to ones sense of self. Thus the decision can be laden with emotional factors that are less important in decisions to buy books, music, food, and electronics.
An analysis by Harris Interactive ecommerce Pulse computed the ratio of dollars consumers spent off-line as a result of on-line shopping to dollars spend on-line. The greater the ratio, the more likely that on-line shoppers use internet shopping sites to gather information about products, rather than to make direct purchases. It is not surprising that for this measure apparel led the list of categories studied: for every dollar spent on apparel on-line, consumers who
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visited on-line apparel sites spent $2.92 purchasing apparel from catalogs or brick and mortar stores. Lower on the list are products that are easier to specify: computer software (off-line to on-line ratio = $0.99); health and beauty products ($0.93); music/video products ($0.83); and books ($0.68).
More fashionable items may be more risky to purchase on line: the decision to purchase online is more significant because of the increased importance of touch and feel, color and cost, and the increased emotional element associated with more fashionable clothing. However, the Internet is expected to penetrate the fashion segments of the market, in part because it will provide exposure and access to unique or unusual products that are hard for consumers to find locally. The ability to customize clothing for fit, fabric, or style should also provide an impetus to increase on-line sales of fashionable garments.
Business-to-Business E-Commerce Models in the Textile-Apparel-Retail Channel
The potential benefits from successfully leveraging web-based B2B models in the textile and apparel industries are tremendous. With increasing product proliferation and shorter product life cycles, these industries incur significant excess costs in the form of inventory carrying costs, stock out costs, and markdown costs.
Exhibit: Apparel Supply Chain-B2B Opportunities
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Improving, visibility in the supply chain for proper distribution, product identification, must be detailed, virtual model, zoom technology, sizing information and discounting that all factors are important to attract the customer.
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Chapter 6: CONCLUSION & RECOMMENDATIONS
6.1
Conclusion
6.2
Recommendations
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Chapter 6: CONCLUSION & RECOMMENDATIONS

6.1 Conclusion,
The W.T.O. aim is to progressively lower the barriers to world trade through multilateral agreements. Classic economic theory suggests that the global economy will grow faster if trade barriers are removed, leaving people and countries to focus on the things they can do best. But will trade be truly free and fair by then? It is doubtful.
1. Many developing countries have longer time frames for opening their markets. 2. Tariff barriers remain high on some products, even in developed economies such as the USA. The Industry has potential to perform better. There is need that both Government and industry should realize that a sincere and appropriate approach has to be made to meet the challenges of the present day competitive environment and future scenario when textiles and clothing sectors are to be fully integrated where quality of product would be the major aspect to customers satisfaction besides price and after sales service. Investment in knowledge of markets, training of workers, improvement in labor productivity and product development would be immediate areas for each to concentrate.
The Government has to ensure:
Stable macro economic environment. Adequate finance for capital investments and working capital. Consolidation of Federal/Provincial/Local Government Taxes and collection at one source. Rationalization of the existing policy frame work and gradually developing a long term policy environment facilitating for long term project and business planning without economic shocks.
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Motivation to higher value addition within the chain as well as each product group.
The industry has to:
Redevelop competitiveness by improving productivity reduce wastages and thus lower cost of production. Expand product base within each sub-sector at par with other competitors. Develop marketing strength by adopting aggressive marketing strategies. Focus on emerging marketing of developing countries, which offer opportunities with opening up of the markets under W.T.O. regime.
Human Resource Development
Investments in physical and technological resources will have to be matched by equivalent investment in the development of human resources, an area where local industry has been lacking with severity. The problems of low productivity, inefficiency and quality can be solved only if investments are made in equipment as well as human resource development.
International Standard Cotton
Since Pakistans textile potential is based on availability of local raw materials, this comparative advantage can only be exploited fully if the cotton lint available at the ginning factory gate is of international grades and quality standards. Currently Pakistani cotton falls short of this ideal. Unless quality standards (and consequent relation of quality to price) are ensured, the textile potential will not be realized
Shift to Value Addition
Value addition is a pre-requisite if Pakistan wants to attain a dominant position in the global textile arena. Value addition in the textile sector can be achieved vide a two pronged approach. Firstly by changing the product mix, e.g. in spinning switch from manufacturing of low counts yarns to finer counts yarns
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and secondly by moving into the exports of high value items i.e. garments and made-ups.
Shift to Man Made Fibers
Globally there is a shift of production from pure cotton based textiles to blended and synthetic textile products. In case of cotton fabric the total global production has been stagnant for the last ten years. Similarly the global man made fiber consumption has also increased from 48% to 59% whereas the share of cotton fiber has declined. In Pakistan the consumption of man made fibers is very low. For spinning only 18% of the total spindle capacity is used for man made fibers in Pakistan, whereas in India 40% of the total spindles are run on man made fibers. A very low proportion of Pakistan's textile exports comprises of pure synthetic products, whereas the market for these products is much bigger than that of cotton and blended textile products. Again the focus of the strategy will have to be on the production of blended and synthetic textile products which is the area of future growth.
Knitted Garment Sector
Like the weaving sector, the knitted garment sector has been considered an ancillary of the spinning sector. This sector is largely fragmented and mostly faces the same problems as faced by the weaving sector i.e. low price realization, poor quality, lack of international exposure, etc. To increase the productivity of this particular sector, it is recommended to: Reduce the dependency on the buyers Innovate Focus on the potential customers/markets Standardize operations and manufacture product of even quality Carry out appropriate processing design and equipment layout on the basis of process analysis, Ordering of process steps, and measurement of standard times for each product line. Improve and standardize processing on the basis of analysis of operations, and implement training of
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Operators to increase their knowledge and understanding in finished products.
Product quality levels are low
Upgrade the basic production of technology of patterning, cutting, sewing and finishing use blank materials of high quality, increase the variety of blank materials used such as woven clothes of fine count, plain dyed cloth etc., increase the brightly colored materials. Use accessory items of good quality (buttons, lining, etc.) of good quality, encourage and increase exchanges and contact concerning design and technology with overseas bodies.
Maintenance and supervision of equipment is insufficient
Implement daily checks of equipment and servicing operations. Shortage of well trained personnel in technology and management Trained engineers are required who can plan process design and production schedules
Marketing of Apparel
Focus on E.C and the USA Markets The existing share in the E.C and USA lower-end markets should be increased and mass production markets should be entered through the development of distinctiveness in its products
Effective approach to R&D
Direction for Human Resource Development
The number of middle management should be increased and basic education should be improved. Systems for technical instruction and personnel training should be reinforced. Salaries of instructors should be reviewed. There should be improvement in facilities and equipment provided to educational and training institutes. Technical experts from all over the world should be invited for this purpose.
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6.2
Recommendation,
Critical Country Perceptions
Since a pectoral strategic development plan has to operate within the broad environmental canvas of the country or the region, there are many extraneous factors that have a profound influence on the operational aspects of the strategy, sometimes in an absolutely critical way. The proposed textile vision 2005 assumes that none of these factors will play a hostile role as the implementation phase unfolds. An enabling backdrop is a vital pre-requisite to the viability of this strategy. The main factors that will effect the outcome are listed as under:Supportive External Factors
The role of International bilateral and multilateral donors is critical in developing perceptions about the economic health of a country, particularly less developed countries (LDCs). These external factors prove to be very supportive provided the donors have a positive opinion and vice versa.
Business Environment
Another crucial factor in stimulating foreign as well as domestic investment is the investment policy of a country. Investor friendly business environment refers to the set of incentives and the comfort level in business operations offered to investors.
Country Image
Pakistan is globally perceived to be a low quality producer. Even if an 'A' grade product is manufactured, according to international quality standards, it still is not able to fetch a better price in the international markets. A negative country image discourages the switch from low value added products to higher value added products.
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Procedural and Regulatory Barriers
Pakistans economy is considered to be amongst the highly regulated economies in the world. An entrepreneur has to deal with a wide range of different Government agencies to run an enterprise. Similarly a cumbersome procedure of the Government departments discourages the use of various packages offered to facilitate the business, especially exporters. Cases in point are the No Duty No Drawback (NDND) scheme and other programs related to temporary imports.
Political Stability
Last but not the least is the political stability in the country. Pakistan is considered to be a high-risk country due to political instability. Frequent changes at the top result in reversal or termination of policy measures. Investment and Capital accumulation can only take place through guaranteeing the continuity of different initiatives and policies undertaken by a regime.
General Interventions
Textile is a mega-sector with a long value chain. Each of the sub sectors in this value chain has very specific impediments to its optimum development and growth against which Textile Vision has suggested detailed workable recommendations. There are also certain limitations that affect the Textile sector on the whole. These problems are generic and concern each fob of the value chain. Therefore common interventions that will impact all the sub-sectors across the textile industry are listed and discussed together in the General Intervention package.
Monitoring of textile industry performance
Currently there is no system in the country to monitor the performance of the textile sector on a regular basis. Such actions are initiated as need arises. The Textile Board with the support of its specialized wings would be in a position to analyze the performance of the industry and set annual production targets. It would also evaluate the export performance of the sector.
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Technology Up-gradation needs analysis
Competitive advantage is the key to success in the textile business. Considering the dynamic nature and diversity of technology in various subsectors of textiles, there is strong need to create awareness among the industrialist about technological advancements and process improvements. The Textile Board would play this role by conducting up gradation need analysis across the textile value chain. At a large scale the Board would also facilitate the transfer of technology in the country.
Effective Marketing of textile products
Marketing has been a major issue for all the exporting industries in the country. EPB's effort in this regard is diluted due to its responsibility to promote exports from all the sectors. Furthermore there is a major perception problem regarding the image of the country, the 'Made in Pakistan' label on an 'A' grade textile product results in low price realization. Marketing of textile products will be the role of Textile Board, it will explore new markets for Pakistani products; provide marketing support to the industry in introducing new products. It will also coordinate with the EPB in its activities and ensure the representation of the textile industry in international events. In order to improve image of Pakistan's textile products the Board would have to rely on marketing and advertising through international electronic and print media.
Industry Training Need Analysis
A number of training institutes are currently present, which impart training on different textiles subjects such as spinning, processing, etc. These institutions are in a dire need of restructuring to equip them with modern training facilities and update the syllabus. This is vital to the transformation of the textile sector to exploit the opportunities arising out of MFA phase out. The textile board will conduct a training need analysis of the textile sector to meet its future requirements and will carry out the task of restructuring of institutions accordingly. If need be, new institutions will also be setup by the board.
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Textile Quality Standards
Quality of textile products is crucial to improve the image of Pakistan textile industry internationally, which currently is the perceived to be the lowest. The quality standards of a wide range of textile products are non-existent. The textile board will have the task to formulate product standards for textiles and implement them. Similarly the MFA phase out and lowering of tariff barriers will start a new phase of non-tariff barriers for the exporters of developing countries, these include quality system compliance with ISO, standards of engagement, child labor and environment standards. This will be another important function of the board to facilitate the industry gear itself and compete globally.
Textile Industry Statistics
Accurate and detailed statistics provide sound foundation to a realistic analysis. Under the existing situation there is no system of collecting statistics on a regular basis and, across the textile sector value chain. The statistics on the formal sector only does not give a complete picture. One of the functions of the textile board will be to gather statistics not only on the formal sector but also on the informal textile sector including the power looms, small dyeing units, stitching units and other process vendors. The board will serve as a hub of information to the textile industry for international trade statistics (import exports) which form the basis of export marketing.
Promote investments in the textile sector
Currently in the textile industry of Pakistan there is no direct foreign investment (DFI). Even the export processing zone concept has failed to attract foreign investment in the country. There is only one joint venture in the mega industrial sector of the economy, whereas, countries like Indonesia, Bangladesh and also India have a number of joint ventures in the textile sector. It would be the responsibility of the textile board to devise strategies so as to attract foreign as well as local investment in the textile sector. The concept of Textile City would also be developed by the board to promote joint ventures and foreign investment in the textile sector.
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The Board should be headed by a full time Chairman preferably from the Private Sector who is well versed in project management techniques and can take full responsibility for the implementation of the strategy. For this he will require full commitment and support from the highest office in the country. The membership of the Board must have a private sector bias with the inclusion of industry representatives.
Anti Dumping and Countervailing Duties
The Ministry of Commerce should upgrade its institutional arrangements and expertise to deal with complex issues involving anti-dumping issues and countervailing duties arising as a result of global integration. Interestingly, majority of anti dumping cases in the WTO are on Pakistan's export of textiles. It is important for the Government to continuously monitor the imports of various textile products into the country, to take notice of dumping from other countries.
International Exhibitions
International exhibitions and trade shows provide an excellent opportunity to gain access to new markets, increase penetration in existing markets and introduce new products. By ensuring participation in trade related international events export growth can be enhanced to a great extent. The Export Promotion Bureau has policy of sponsoring exporters from various sectors to these international trade fairs and exhibitions. It is observed that there are no set criteria of the selection of participants for such events, which sometimes results in building a negative country image. In this regard it is proposed that EPB should lay down certain standards for participating in trade fairs and preference should be given to the exporters of high value added quality textile products.
International Standards Compliance
The implementation of WTO and the MFA phase out will start another era of non-tariff barriers for the developing countries. The non-tariff barriers consist of a long list of standards and social issues including, child labor, terms of engagement, environment and other quality standards like ISO 9000 & 14000, CE marking, etc. Already the Ministry of Science & Technology is providing a
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cash incentive of Rs. 200,000 for ISO certification. It is proposed that firstly the application of this cash incentive on quality standards compliance should be broadened and other standards should also be made a part of the scheme. Secondly, Ministry of Industries and the Ministry of Science and Technology should jointly work out a program of educating and creating awareness among the exporters regarding the negative impact of the upcoming non-tariff barriers.
E-Commerce
The increased use of Internet has transformed the world into a global village. Besides being the biggest source of information, Internet is also nowadays playing an instrumental role in business transactions. Numerous organizations are actively developing databases to facilitate business-to-business commerce and trade (B2B Commerce). The concept is based on creating a virtual marketplace for the buyers and suppliers. In order to achieve the desired targets and quantum leap incentives should be given to promote the use of internet in the industry. To initiate the process awards may be given to best textile web sites, transactions/exports materialized through B2B commerce can be rewarded through additional quota allocations and free participation in trade fares.
Export Recommendation,
Long term, Fixed Rate, and export Oriented Projects Financing Scheme- to enhance the production capacity.
Financial Support for compliance certifications for international quality, environment and social standards. Research and Development Support for the textile sector, leather garments & footwear, and to motorcycle industry on export of their products.
Assistance for opening exporter's offices abroad. Support for marketing of branded products. To encourage investment and facilities exports, scheme of exportoriented units has been introduced.
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The Government has to ensure:
Stable macro economic environment and adequate finance for capital investments and working capital. Consolidation of Federal/ Provincial /Local Government taxes and collection at one source. Rationalization of the existing policy frame work and gradually developing a long term policy environment facilitating for long term project and business planning without economic shocks.
Motivation to higher value addition within the chain as well as each product group.
The industry has to:
Redevelop competitiveness by improving productivity reduce wastages and thus lower cost of production. Expand product base within each sub-sector at par with other competitors. Develop marketing strength by adopting aggressive marketing strategies. Focus on emerging marketing of developing countries which offer opportunities with opening up of the markets under W.T.O. regime
Recommendation of water crisis
Fast track implementation of 3 mega canals projects namely; Kachhi Canal in Balochistan, Rainee Canal in Sindh and Greater Thal Canal in Punjab for irrigating 2.864 million acres.
Substantial completion of Mangla Dam Raising Project for additional storage of 2.9 MAF and additional power of 120 MW. In drainage sector fast track implementation of RBOD-I, II & III Project to protect and reclaim
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Water plays vital role in improving per acre yield. Increase in water supply being a key input is required to raise cropping intensity and enhance
The income of the farmers: Since inception, ZTBL (Zarai Taraqiati Bank Limited) has financed over 144,478 tube wells by disbursing over Rs 14,713 million. For raising irrigated area to accelerate the economic growth and to facilitate the farmers, ZTBL will also provide loans to farmers for installation of tubewells/turbines.
Focus on Value Addition
Pakistan is a leading exporting nation in raw yarn, cotton, and fabrics. If we emphasis on the value added products like garments, Hosiery, knitwear and other textile made-ups, the export volume of textiles can be increased by manifolds. In this respect top priority should be given to stitching industry that leads to highest value addition and employment generation
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BIBLIOGRAPHY
GOVERNMENT OF PAKISTAN, MINISTRY OF INDUSTRIES & PRODUCTION
TEXTILE COMMISSIONERS ORGANIZATION (FEDERAL TEXTILE BOARD) http://www.pakistaneconomist.com/pagesearch/ http://www.sbp.org.pk/library/FreshArrivalsBulletinPart http://www.finance.gov.pk/admin/images/survey/chapters/03-Manufacturing http://www.ptj.com.pk/Web%202007/10-07/10-07-PDF/briefs. http://ptj.com.pk/newsite/editorial/Issue_01_2007/apparel-and-knitwearsectors http://www.aptma.org.pk/Reviews.asp http://www.pakistan.gov.pk/divisions http://www.pakistaneconomist.com/pagesearch/Search-Engine Gul Ahmed Textile Mills & Apparel Division www.smeda.org/ISC-renewable-energy-textile-sector www.ishrathusain.com/speeches/economicManagementPolicies www.tco.gov.pk/Webs www.paksearch.com/Government/STATISTICS Shar Pak (Pvt.) Ltd. Apparel Buying Services.
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Textile & Apparel Industry, Evaluation & Future Challenges in Pakistan

INSTITUTE OF BUSINESS AND TECHNOLOGY

Textile & Apparel Industry, Evaluation & Future Challenges in Pakistan

MBA (Marketing) FACULTY OF MANAGEMENT AND SOCIAL SCIENCES

Institute Of Business & Technology

Textile & Apparel Industry, Evaluation & Future Challenges in Pakistan

INSTITUTE OF BUSINESS AND TECHNOLOGY

NAME OF PROJECT SUPERVISOR:

Textile & Apparel Industry, Evaluation & Future Challenges in Pakistan

Institute Of Business & Technology

Textile & Apparel Industry, Evaluation & Future Challenges in Pakistan

Introduction Purpose of Study Research Objectives Research Methodology

TEXTILE INDUSTRY IN PAKISTAN

Institute Of Business & Technology

Textile & Apparel Industry, Evaluation & Future Challenges in Pakistan

WEAKNESS OF GLOBAL TEXTILE

CONCLUSION & RECOMMENDATIONS

Textile & Apparel Industry, Evaluation & Future Challenges in Pakistan

Institute Of Business & Technology

Textile & Apparel Industry, Evaluation & Future Challenges in Pakistan

T he textile & apparel industry of Pakistan is going towards a difficult stage

Institute Of Business & Technology

Textile & Apparel Industry, Evaluation & Future Challenges in Pakistan

Textile & Apparel Industry, Evaluation & Future Challenges in Pakistan

1.2 Purpose of the Study

1.3 Research Objective

Institute Of Business & Technology

Textile & Apparel Industry, Evaluation & Future Challenges in Pakistan

Institute Of Business & Technology

Textile & Apparel Industry, Evaluation & Future Challenges in Pakistan

1.3 Research Methodology,

Institute Of Business & Technology

Textile & Apparel Industry, Evaluation & Future Challenges in Pakistan

Chapter 2: TEXTILE INDUSTRY IN PAKISTAN

History of Textile Industry in Pakistan

Hosiery & Readymade Garments

Institute Of Business & Technology

Textile & Apparel Industry, Evaluation & Future Challenges in Pakistan

2. TEXTILE INDUSTRY IN PAKISTAN

Institute Of Business & Technology

Textile & Apparel Industry, Evaluation & Future Challenges in Pakistan

Institute Of Business & Technology

Textile & Apparel Industry, Evaluation & Future Challenges in Pakistan

Institute Of Business & Technology

Textile & Apparel Industry, Evaluation & Future Challenges in Pakistan

Textile & Apparel Industry, Evaluation & Future Challenges in Pakistan

Textile & Apparel Industry, Evaluation & Future Challenges in Pakistan

Institute Of Business & Technology

Textile & Apparel Industry, Evaluation & Future Challenges in Pakistan

Institute Of Business & Technology

Textile & Apparel Industry, Evaluation & Future Challenges in Pakistan

Textile & Apparel Industry, Evaluation & Future Challenges in Pakistan

Ginning Process in Pakistan (Seed Cotton Transportation and Storage),

Institute Of Business & Technology

Textile & Apparel Industry, Evaluation & Future Challenges in Pakistan

Institute Of Business & Technology

Textile & Apparel Industry, Evaluation & Future Challenges in Pakistan

Institute Of Business & Technology

Textile & Apparel Industry, Evaluation & Future Challenges in Pakistan

Institute Of Business & Technology

Textile & Apparel Industry, Evaluation & Future Challenges in Pakistan

Institute Of Business & Technology

Textile & Apparel Industry, Evaluation & Future Challenges in Pakistan