Currently, Textiles comprise 60% of Pakistan’s export revenues and account for almost 8.5 percent of the GDP of the country. Although the Current challenges of the textile industry hurting the country’s exports.
Textile industry – the single largest export earning sector of Pakistan is the perfect opportunity for the government to cash on. If the state gives the producers the right assistance, the two can make the industry realize its full potential.
Pakistan’s textile sector, which makes up around 60% of the country’s exports is seeing a loss in terms of international buyers and their orders. This loss is reportedly due to the growing competition in the region as well as many other factors. If the government of Pakistan succeeds in resolving these issues then we earn a massive amount of revenue from the textile industry.
Cotton Yarn Crisis
The cotton yarn crisis is an initial challenge for the textile industry– after the recent heavy rainfall and pest attack played an outsized role in depressing the cotton yields. Unavailability of cotton yarn and stuck duty and income tax refund claims are adversely hurting the export growth, putting export orders worth millions of dollars at stake. The shortfall in domestic supplies of cotton yarn will be bridged through imports. Hence, cotton imports recorded at 4.9 million of 480 lb bales, which is marginally higher than the local production of 4.7 million bales during the year. The government should remove barriers to cross-border cotton imports to reduce the prices of cotton yarn. The government should take immediate measures to ease the financial stress and Increase domestic cotton production by improving R&D.
There have not been enough efforts from the country’s government in the matter of the energy crisis. In January 2021, the Cabinet Committee on Energy (CCoE) decided to ban gas supply for power production in captive power plants (CPPs) to fulfill the gas supply for domestic consumers. Manufacturers had to move to alternative methods of producing electricity like generators and invertors, eventually leading to a rise in the costs of production. The shortage of electricity hence increased expenses and reduced profitability for textile exporters of the country. As a result of lack of power supplies international buyers cancel their buying orders from exporters. Hence many factories closed down and thousands of individuals remained unemployed. This has affected the textile industry of Pakistan tremendously. The government should withdraw the gas for captive power plants in a phased manner. Government should reconsider its decision of discontinuing fresh gas supply to CPPs as its use is economic and not consumptive. Thus in turn it results in employment generation and enhanced exports.
Pakistan’s textile and apparel industry also faces intense competition from countries like m India, Bangladesh, Vietnam, Thailand, and other states in the foreign market. As Pakistan does not see adequate investment flow in the country so its textile and apparel industry remains unchanged, not timely modernize the equipment and machinery. The Indian textile industry has adopted the latest technologies and come out with the latest product designs to be competitive in the global market.
Lack of R&D institutions:
Pakistan has a lack of effective links between research organizations and industry to develop a new product. The lack of research & development (R&D) in the cotton sector of Pakistan has resulted in a low quality of cotton in comparison to the rest of Asia. Resulting in low profitability in cotton crops, farmers are shifting to other cash crops in Pakistan. There is also a lack of supplementing R&D efforts in fabric to compete with the existing and emerging competitors.
Lack of Investment
Due to disruptive political instability in Pakistan, nobody is interested to invest there. If government succeed to attract foreign investor by improvement of security situation than, this is a positive sign that Pakistan could take it an opportunity to secure future business.
Economic factors such as the depreciation of the national currency, increasing interest rates, dual-digit inflation, and the rising cost of raw materials have also placed major obstacles against the country.
Thus, It can be concluded that the textile and garment industry of Pakistan has immense potential to expand, if it takes into consideration the various obstacles that require immediate and necessary actions, especially by the government to strengthen the sector. Therefore, the government should take serious initiatives to safeguard domestic industry which is the highest foreign exchange earner and largest urban employment provider. To develop the textile and apparel business in the global platform Pakistan should meet more and more customer’s needs. The government’s policy is highly essential to create a comfortable atmosphere in the trade and business for foreign investment.
In today’s highly competitive global environment, the textile sector needs to improve its supply chain, improve productivity, and maximize value-addition to be able to survive. Failure in taking steps can pull the textile industry down leading to the failure to compete in the international market.
Key Points of Pak Textile Industry:
- Pakistan’s textile industry is contributing 60% to the country’s exports.
- Accounting for almost 8.5 per cent of the GDP of the country.
- Pakistan is the 8th largest exporter of textile products in Asia.
- The country is also the fourth-largest producer and 3rd largest consumer of cotton.
- It comprises 46% of the total manufacturing sector and employs 40% of the production labor workforce.
- 5% of the total textile companies are listed on the stock exchange and 423 textile industries are operating in the country.
- The country also has 442 spinning mills, 1260 ginning units, 2550 garment manufacturing companies, and 600 knitwear producing units.
- Pakistan has a supply base for almost all artificial and natural yarns and fabrics, including cotton, rayon, and others. This richness in the raw material is a big benefit for Pakistan due to its advantageous impact on cost and operational lead time.