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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 (ready- made 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)
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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)
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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
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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