About the Textile Industry of Pakistan

Pakistan is the fourth largest cotton producer in the world. Because of its plentiful, indigenous cotton supply, the textile industry is central to the Pakistani economy and is both a source of employment and a source of exports. Pakistan's industrialization began in the 1950s with the textile industry at its center. Today, textiles account for 38 percent of total manufacturing and 8 percent of GDP. The textile industry employs almost 40 percent of the industrial workforce. Despite the critical role textiles play in the economy, most textile manufacturers are cottage or small-scale industries. Pakistan relies on outside engineering and manufacturing expertise and must purchase most of its equipment abroad. Recognizing the importance of the textile industry to the nation's economy, the Pakistani government began taking steps in 2005 to rebuild the competitiveness of this critical industry.

History

The Pakistani textile industry depends on domestic agriculture to supply its raw materials, thus the success of the cotton crop is critical to the health of the textile industry. Cotton accounts for 14 percent of land under cultivation in Pakistan. Pakistan has suffered from a number of cotton failures over the years, beginning in the early 1990s. These crop failures drove up the price of cotton, and this coupled with a market recession and tightened finance regulations led to a weakened textile industry.

Industry Sectors

The spinning sector is where the majority of Pakistan's textile industry is concentrated. Over the years, spinning expanded while weaving declined. The rapid expansion of the spinning sector was hastened by access to cheap raw materials---cotton---and cheap labor. This sector's profitability was furthered by a protectionist fiscal policy and export subsidies. In keeping with increased spinning capacity, cotton production has increased tremendously. The textile industry's weaving sector is comprised of towels, bedding and hosiery and has been adversely affected by tariffs and inflation over the years. The garment sector has undergone considerable modernization and has developed great export potential.

Government Initiatives

In 2005, the Pakistani government created a special textile sub-committee in order to formulate a new textile strategies and policy in the hopes of revamping the textile industry. The sub-committee submitted a report entitled "Textiles Vision 2005" which included a number of recommendations including improved product quality, equipment upgrade, developing human resources, aggressive targeting of new markets and development of high-powered leadership for the textile sector.

Exports

Cotton and yarn are Pakistan's primary textile exports. The textile industry accounts for over 60 percent of Pakistan's total exports. The All Pakistan Textile Mills Association is the organization that regulates the industry, which is currently facing a number of challenges, including the need to improve quality.

Competition

Pakistan must compete with other producers similar in conditions and comparative advantage. The Pakistani Textile industry's biggest competitors are China, India, Indonesia and Turkey. The cost of power in Pakistan is comparatively high.