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

7/27/2019 Project for Textile & Apparel Ind. Future Challenges in Pakistan.

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Textile & Apparel Industry, Evaluation & Future Challenges in Pakistan

Institute Of Business & Technology 1

INSTITUTE OF BUSINESS AND TECHNOLOGY

Textile & Apparel Industry, Evaluation &Future Challenges in Pakistan

Prepared By

Muhammad Tauqeer Ahmad

Course Code : MKT- 606

MBA (Marketing)

FACULTY OFMANAGEMENT AND SOCIAL SCIENCES

December 2008


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INSTITUTE OF BUSINESS AND TECHNOLOGY

ABSTRACT SUBMITTED BY: Muhammad Tauqeer Ahmad

DISCIPLINE: MBA(Marketing)

TITLE OF PROJECT REPORT: 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.


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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 thisreport 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 abstractideas 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. Finance Manager

Mr. Director

Mr. Marketing Manager

Mr. Operation Manager

Mr. H.R. Manager

Mr. Production Executive

Mr. Executive Director

Mr. Finance & Import / Export Manager

Mr. Merchandising / Marketing Manager

Mr. Development Manager

Mr. Finance & Import Manager

Mr. 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.


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CONTENTS

ACKNOWLEDGEMENT

ABSTRACT

Chapter: 1 INTRODUCTION 06

1.1 Introduction 07

1.2 Purpose of Study 09

1.3 Research Objectives 09

1.4 Research Methodology 11

Chapter: 2 TEXTILE INDUSTRY IN PAKISTAN 12

2.1 History of Textile Industry in Pakistan 13

2.2 Cotton 16

2.3 Ginning 202.4 Spinning 24

2.5 Yarn 28

2.6 Cloth 33

2.7 Made-Up Textiles 35

2.8 Hosiery & Readymade Garments 35

Chapter: 3 EXPORT PERFORMANCE 37

3.1 Over view 38

3.2 Export of Textile Manufactures 39

3.3 Problems 58

3.4 Role of the textile industry in national economy 65


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Chapter: 4 WEAKNESS OF GLOBAL TEXTILE 66

4.1 Global Challenges, over view 67

4.2 Pakistan 67

4.3 India 68

4.4 China 68

4.5 Bangladesh 68

4.6 Vietnam 69

4.7 Thailand 69

4.8 Sri Lanka 69

4.9 Indonesia 70

Chapter: 5 FUTURE CHALLENGES 71

5.1 Introduction 72

5.2 Power Energy Crisis 72

5.3 Water Crisis 755.4 Quality Development 82

5.5 Modern Trends for the Apparel Sector 85

5.6 Emerging Challenges in Cotton Farming in Pakistan 90

5.7 Compliances Issues 104

5.8 H.R. Development 110

5.9 Post Quota Challenges 113

5.10 E-Commerce in T & A Industries 121

Chapter: 6 CONCLUSION & RECOMMENDATIONS

6.1 Conclusion 130

6.2 Recommendations 131

BIBLIOGRAPHY 142


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Chapter 1: INTRODUCTION

1.1 Introduction

1.2 Purpose of Study

1.3 Research Objectives

1.4 Research Methodology


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1 - INTRODUCTION

1.1 Introduction

The 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-to-

date 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


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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 companieswho 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 themanufacturers were guaranteed a certain market share due to quotas. The


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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 evaluatethe 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


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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 above-

mentioned 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 internationalmarket 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 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 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 Sri-

Lanka 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 belongingto the mallow family produce Cotton. The immature flower bud blossoms and


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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 - 3percent lower than last world mill use is projected to increase further to 124.6


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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.

Product ion and Yield of Cotton,

Cot ton Pr ices

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 Rs1,422per 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 decl in ing,

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 Punjabover a number of years, and is also coming up in the district of Nasirabad in the


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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 18"x22"x44"

Bale weight 170 Kg

1 Maund of Phutti weighs 40 Kg

1Maund of Lint Cotton weighs 37.324 Kg

Contamination: 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

Ginnin g Process in Pakistan (Seed Cotton Transpo rtat ion 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 theinternational 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 factor ies 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 sub-

standard yarn, its effect goes right across the entire value chain.

INSTAL LED 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 NA 78 0 0 0 3 78 0 0 3 0

1949 NA 137 75.64 0 0 3 0 137 75.64 0 0 3 0

1950 NA 182 32.85 0 0 3 0 182 32.85 0 0 3 0

1951 NA 225 23.63 0 0 6 100 225 23.63 0 0 3 0

1952 NA 499 121.78 0 0 9 50 302 34.22 0 0 4 33.33

1953 NA 649 30.06 0 0 15 66.67 600 98.68 0 0 7 75

1954 NA 1113 4.76 0 0 23 53.33 940 56.67 0 0 13 85.71

1955 NA 1449 3.29 0 0 24 4.35 1355 44.15 0 0 19 46.15

1956 NA 1518 0.06 0 0 25 4.17 1422 4.94 0 0 22 15.79

1957 NA 1568 0.76 0 0 26 4 1447 1.76 0 0 22 0

1958 NA 1569 0.06 0 0 26 0 1459 0.83 0 0 24 9.09

1958-59 70 1581 0.25 0 0 27 3.85 1488 1.99 0 0 24 0

1959-60 72 1582 3.66 0 0 27 0 1491 0.2 0 0 26 8.33

1960-61 74 1586 12.53 0 0 28 3.7 1531 2.68 0 0 26 0

1961-62 71 1644 3.41 0 0 29 3.57 1524 -0.46 0 0 26 0

1962-63 76 1850 2.82 0 0 30 3.45 1810 18.77 0 0 26 0

1963-64 81 1913 4.52 0 0 31 3.33 1792 -0.99 0 0 28 7.69

1964-65 83 1967 -0.63 0 0 31 0 1852 3.35 0 0 28 0

1965-66 89 2056 0.24 0 0 30 -3.23 1871 1.03 0 0 27 -3.57

1966-67 94 2043 6.2 0 0 30 0 1888 0.91 0 0 28 3.7

1967-68 95 2048 10.21 0 0 30 0 1916 1.48 0 0 28 0

1968-69 100 2175 8.68 0 0 31 3.33 2090 9.08 0 0 27 -3.57

1969-70 107 2397 9.9 0 0 30 -3.23 2327 11.34 0 0 27 0

1970-71 113 2605 14.08 0 0 30 0 2491 7.05 0 0 27 0

1971-72 131 2863 2.45 0 0 29 -3.33 2650 6.38 0 0 26 -3.7

1972-73 150 3266 0.6 0 0 29 0 3057 15.36 0 0 27 3.85

1973-74 155 3346 2.64 0 0 29 0 3034 -0.75 0 0 26 -3.7

1974-75 144 3366 2.63 0 0 29 0 2823 -6.95 0 0 25 -3.85

1975-76 147 3455 1.1 2 0 29 0 2579 -8.64 1 0 23 -8

1976-77 153 3546 4.02 5 150 26 -10.34 2650 2.75 1 0 19 -17.39

1977-78 174 3585 1.39 4 -20 27 3.85 2585 -2.45 3 200 14 -26.32

1978-79 184 3729 6.66 14 250 26 -3.7 2645 2.32 13 333.33 13 -7.14

1979-80 187 3781 4.86 16 14.29 25 -3.85 2701 2.12 14 7.69 14 7.69

1980-81 203 4033 1.99 19 18.75 25 0 2833 4.89 15 7.14 13 -7.14

1981-82 210 4,229 4.86 23 21.05 24 -4 2,832 -0.04 19 26.67 13 0

1982-83 215 4,313 1.99 27 17.39 24 0 2,986 5.44 25 31.58 12 -7.691983-84 216 4,272 -0.99 29 7.41 23 -4.17 2,919 -2.24 23 -8 11 -8.33


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1984-85 219 4,445 4.05 29 0 19 -17.39 2,872 -1.61 21 -8.7 10 9.09

1985-86 227 4,485 0.9 37 27.59 17 -10.53 3,151 9.71 25 19.05 9 -10

1986-87 226 4,356 -2.88 48 29.73 16 -5.88 3,469 10.09 40 60 8 -11.11

1987-88 224 4,393 0.85 55 14.58 17 6.25 3,607 3.98 46 15 9 12.5

1988-89 247 4,853 10.47 66 20 16 -5.88 4,026 11.62 60 30.43 9 0

1989-90 266 5,271 8.61 72 9.09 15 -6.25 4,489 11.5 64 6.67 8 -11.111990-91 277 5,568 5.63 75 4.17 15 0 4,827 7.53 67 4.69 8 0

1991-92 307 6,216 11.64 81 8 14 -6.67 5,333 10.48 67 0 8 0

1992-93 334 6,860 10.36 95 17.28 14 0 5,520 3.51 79 17.91 6 -25

1993-94 471 8,419 22.73 138 45.26 14 0 6,105 10.6 84 6.33 6 0

1994-95 494 8,610 2.27 132 -4.35 13 -7.14 6,262 2.57 74 -11.9 5 -16.67

1995-96 503 8,717 1.24 143 8.33 10 -23.08 6,548 4.57 80 8.11 5 0

1996-97 440 8,230 -5.59 143 0 10 0 6,538 -0.15 87 8.75 5 0

1997-98 442 8,368 1.68 150 4.9 10 0 6,631 1.42 80 -8.05 4 -20

1998-99 442 8,392 0.29 166 10.67 10 0 6,671 0.6 66 -17.5 5 25

1999-00 443 8,477 1.01 150 -9.64 10 0 6,825 2.31 66 0 4 -20

2000-01 444 8601 1.46 146 -2.67 10 0 6913 1.29 70 6.06 4 02001-02 450 9060 5.34 141 -3.42 10 0 7440 7.62 66 -5.71 5 25

2002-03 453 9260 2.21 148 4.96 10 0 7676 3.17 70 6.06 5 0

2003-04 456 9592 .3.59 146 -1.35 10 0 8009 4.34 66 -5.71 4 -20

2004-05 458 10485 9.31 155 6.16 9 -10 8492 6.03 79 19..70 4 0

2005-06 461 10437 -0.46 155 0 9 -11.11 9415 10.87 77 -2.53 4 0

Source : APTMA

(a) WORLD BA SIC STRUCTURE DATA

COUNTRY

Spinning Weaving

Ring Spindles O-E Rotors

Shuttleless

Looms Shuttle Looms

2004 2005 2004 2005 2004 2005 2004 2005

Argentina 1,500,000 1,600,000 40,000 43,000 5,500 5,580 17,300 17370

Australia - - - - - - - -

Austria 185,284 176,864 17,248 15,108 - - - -

Belgium 32,208 32,208 15,804 15,804 - - - -

Beazil

- - - - - - - -

4,498,900 4,593,900 327,150 332,750 39,390 40,590 12,000 -

Czech

Republic 272061 222160 47944 44879 5511 5068 268 218

422341 368606 50064 46999 6862 6451 792 732

Egypt 2180000 2150000 38000 31000 3500 3500 3600 3000

France 80000 - 48000 - 3300 - 200 -

Germany 306900 266166 23770 18533 1800 1750 550 510

Greece 692000 682000 17500 17500 50 55 2000 1950

Hungary 88912 - 3560 - 274 238 - -

India 37470358 - 501143 520908 9631 - 103281 -

38494598 37517082 - - 14058 15602 110509 75705

Italy 1298460 1204971 79405 71465 10420 9524 1460 1334Japan 1992000 1803000 51000 46000 14420 13365 18947 16942


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2441000 2219000 51000 46000 37990 36182 44815 41341

Korea , Rep 1574512 1273856 15012 13668 1224 841 - -

Morroco 450000 - 40000 - 2100 - 4000 -

- - - - - - - -

Nigeria 700000 700000 27000 27000 2500 2500 11000 11000

Pakistan 9743483 9815000 150696 155000 25000 26000 225000 275000

Portugal - - - - - - - -

860100 - 36200 - 9050 - 1500 -

South Africa - - - - - - - -

288505 241800 35324 22000 2506 2043 - -

Spain 421564 223438 53060 48190 4814 4625 1203 1157

Srilanka 150000 - - - 1500 - 10000 -

Switzerland 161000 104650 - - 740 610 50 30

Taiwan R.O.C 1995724 1968117 72553 69486 12897 12089 612 521

- - - - 34388 30021 909 818

Turkey 6312339 6418744 543318 552634 - - - -

- - - - 34500 36500 20000 20000

USA 1597000 1430000 576000 502000 - - - -

26000 - 1447 -

(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.


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PROVINCE-WISE CAPACITY EVALUATION (Updated 2007)

INSTALLED: SINDH PUNJAB N.W.F.P. BALUCH. TOTAL KASHMIR G.TOTAL

SPINDLE 2132310 7348510 812480 126800 10420100 93696 10513796

ROTOR 64487 79052 200 14016 157755 0 157755

LOOMS 3318 4121 160 100 7699 0 7699

WORKED:

SPINDLE 1369882 6925503 729835 91975 9117195 64036 9181231

ROTOR 25861 38539 200 9397 73997 0 73997

LOOMS 957 2514 0 0 3471 0 3471

STOPPED POSITION

SPINDLE 762428 423007 82645 34825 1302905 29660 1332565

ROTOR 38626 40513 0 4619 83758 0 83758

LOOMS 2361 1607 160 100 4228 0 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.


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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


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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


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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


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PROVINCE

RAW COTTON CONSUMPTION (IN

000 Kgs.)

PRODUCTION OF YARN (IN 000

Kgs)

COTTON FIBRE TOTAL COTTON BLENDED TOTAL

SINDH 42670 3923 46593 32812 2816 35628PUNJAB 139557 25706 165263 100245 19502 119747

N.W.F.P 5281 4434 9715 6865 2011 8876

BALUCHISTAN 5584 467 6051 4338 396 4734

TOTAL 193092 34530 227622 144260 24725 168985

A.KASHMIR 494 89 583 354 230 584

G.TOTAL 193586 34619 228205 144614 24955 169569

PRODUCTION OF COUNT - WISE YARN WITH PERCENTAGE(000 KGS.)

COUNT

COARSE

2004 - 2005 2005 - 2006 2006 - 2007

QUANTITY %AGE QUANTITY %AGE QUANTITY %AGE

1-9s 118346 5.67 131885 5.95 140648 6.28

10s 153753 7.37 153588 6.93 159842 7.13

12s 75432 3.61 88650 3.99 93592 4.18

14s 39349 1.89 43683 1.97 55728 2.49

16s 163019 7.81 170993 7.71 170297 7.6

18s 56506 2.71 43209 1.95 67983 3.03

20s 397231 19.03 413364 18.65 376494 16.8

Sub. Total 1003636 48.09 1045372 47.15 1064584 47.5

MEDIUM

21s 72717 3.48 71533 3.23 75108 3.35

24s 80572 3.86 75496 3.4 92589 4.13

28s 47678 2.28 55336 2.49 76493 3.41

30s 180163 8.63 191297 8.63 190813 8.51

32s 58614 2.81 65968 2.97 79798 3.56

34s 17799 0.85 20078 0.92 32649 1.46

Sub. Total 457543 21.91 479708 21.64 547450 24.43

FINE

36s 18391 0.88 19864 0.9 25752 1.15

40s 58877 2.82 74103 3.34 91448 4.08

47s 14486 0.69 8013 0.36 24343 1.09

Sub. Total 91754 4.39 53756 2.42 141543 6.32

SUPER FINE

48s 8982 0.43 12845 0.58 16678 0.74


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60s 10280 0.49 17089 0.77 34622 1.54

80s 18744 0.9 23822 1.07 29305 1.31

Sub. Total 38006 1.82 53756 2.42 80605 3.6

P. Viscose 90833 4.35 95671 1.64 81082 3.62

P. Cotton 378032 18.11 403860 18.22 259176 11.56

Sub. Total 468865 22.46 499531 22.54 340258 15.18

TOTAL 2059804 98.68 2180347 98.36 2174440 97.02

WASTE 27483 1.32 36255 1.64 66706 2.98

G.TOTAL 2087287 2216602 2241146

Non Listed Units 203053 339695 486409

TOTAL YARN 2290340 2556297 2727555

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 blendedfabrics. 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 2006-

07. This decline in exports can largely be attributed to increasing cost of

production due to shortage of cotton in the local market, increased wages


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of unskilled workers, massive power cuts, rising international competition and

poor infrastructure have made the local manufacturers and exporters non-

competitive 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.

Instal led 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

Produ ction o f Cloth (M. Sq. Mtrs)


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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 peoplein 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


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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.

Readym ade 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.


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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


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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.


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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).


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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


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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.


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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 non-

traditional 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 activityare all seriously dependant upon the textile and garment sector. A lot has been


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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 $20million. 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.


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Raw Cotton (July-June 02-03 to July-June 06-07)

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.

40,306

$109,957

55,100

37,307

117,084

62,658

45,065

$49,016$47,671

$68,151

$50,22646,328

$1,087.00

$1,277.80

$889.58$939.13

$1,114.001,149.41

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

Jul-Jun 02-03 Jul-Jun 03-04 Jul-Jun 04-05 Jul-Jun 05-06 Jul-Jun 06-07 Mar-Feb 07-08

$0.00

$200.00

$400.00

$600.00

$800.00

$1,000.00

$1,200.00

$1,400.00

Quantity (000) MT Value ('000') AUP (MT)


46/142



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 whichsuggests 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.


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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)

2004-05 2005-06 2006-07

%

INCRE/DECR.

(2006/2007)PRODUCTION (M.BALES)


48/142



RAW COTTON 14.347 12.395 12.4111 0.13

CONSUMTION (000KGS)

RAW COTTON 2124408 2407560 2584428 7.35

M.M.FIBRE 498416 525000 580000 10.48

TOTAL 2622824 2932560 3164428 7.91

IN BALES OF 170KGS 15428377 17250353 1861428 -89.21

PRODUCTION (000 KGS)

COTTON YARN 1770340 2006299 2039056 1.63

BLENDED YARN 520000 550001 688500 25.18

TOTAL 2290340 2556300 2727556 6.7

CONSUMPTION OF YARN

MILL SECTOR (000 KGS) 105362 95710 104423 9.1

PRODUCTON (000

SQ.MTR.)

COTTON CLOTH 842292 862983 951819 10.29

BLENDED CLOTH 82380 52273 61100 16.89

TOTAL 924672 915256 1012919 10.67

NON MILL SECTOR 6192000 7069500 7682738 8.67

G.TOTAL 7116672 7988699 8695657 8.85

EXPORT (IN 000)

RAW COTTON IN KGS. 117084 63025 45069 -28.47

YARN IN KILOGRAM 504722 694526 674841 -2.83

CLOTH IN SQ.MTR. 2399458 2625174 2211182 -15.77

CAPACITY INSTALLED IN JUNE

LPINDLE 10906068 11168780 11265954 0.87

ROTOR 202356 199520 188328 -5.61

LOOM 9322 8747 7899 -9.69


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CAPACITY WORDED

(AVG.)

SPINDLE 8816850 9631304 10057623 4.43

ROTOR 122477 122168 113728 -6.91

LOOM 4705 4205 4252 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%, UKUS $5.6 million or 6%, Belgium US $11 million or 33%, Saudi Arabia US $3.2


50/142



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 It

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

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