Analysis of Textile Industry of Pakistan

Research Paper
on
Analysis of Textile Industry of Pakistan
A Comparative Advantage
By
Ch. Azhar Hayat
Fayyaz Ahmed
Sohrab Khan
Irfan Ahmed
MBA-II
SECTION- B
Table of Contents
Introduction Textile Industry and Pakistan
o Historical Background
o Current Situation
Competitive Advantage
o Diamond Porter Model
Literature Review
o Competitive factors Confronting Pakistans Textile Industry
Conclusion
o SWOT Analysis of Pakistans Textile Industry
Policy Implications
Reference
Introduction
Over the years, Pakistan is said to be the single crop economy i.e. cotton and
textile that claims the lion's share in terms of the contribution in the national
economy of Pakistan.
Despite efforts to bring in diversification in country's overall economic get-up
the textile sector continues to be the most important segment of the national
economy. Its share in the economy, in terms of GDP, exports, employment,
foreign exchange earnings, investment and revenue generation altogether
placed the textile industry as the single largest determinant of the economic
growth of the country.
227
Despite harsh international economic conditions, Pakistan's textile industry

has weathered the storm by coming out of the international crisis in a very
positive manner. During the year 2006-2007 exports were controlled from
falling and significant investment was made in value-added expansion and in
Balancing-Modernization- Replacement (BMR) (Latif, 2000).
About 10 percent of the world cotton crop is produced in Pakistan, making it
the fourth largest producer in the world. The textile industry currently
accounts for almost 67% of Pakistan's exports, 20% of value-added production
and employs 35% of manufacturing labor.
Made of premium quality Cotton, the textile fabrics of Pakistan are
distinguished for their quality, texture, lustrous colour and rich combination of
superior designs and competitive prices.
That is why this sector have been chosen to analyze what are the obstacles that
are affecting the textile industry of Pakistan in achieving competitive edge over
other economies of the world.
Textile Industry and Pakistan The innate relation:
Textiles, all fabrics made by weaving, felting, knitting, braiding, or netting, from
the various textile fibres. Textiles are classified according to their component
fibers into silk, wool, linen, cotton, such synthetic fibers as rayon, nylon, and
polyesters, and some inorganic fibers, such as cloth of gold, glass fiber, and
asbestos cloth. They are also classified as to their structure or weave, according
to the manner in which warp and weft cross each other in the loom. Value or
quality in textiles depends on several factors, such as the quality of the raw
material used and the character of the yarn spun from the fibers, whether
clean, smooth, fine, or coarse and whether hard, soft, or medium twisted.
Density of weave and finishing processes are also important elements in
327
determining the quality of fabrics. The weaving of carpet and rugs is a special
branch of the textile industry1.
Since its inception, Pakistan has its roots in being an agrarian state with
indigenous cotton supply. In 1947, two textile mills were established in the
country as a colonial heritage. However, the Pakistani textile industry has
played a crucial role in the countrys industrial development. Pakistans
Industrialization began in 1950 with the textile industry at its centre 2.
Over the time, textile industry have depleted due to various complexities. The
difficulties faced by textile industry were partly due to limited focus of the
players and partly due to globalization. (Meier, 2007) During 1984-1990 many
of the spinning mills did not go for upward integration as raw cotton suppliers
were adamant in bringing down the prices. And so with the globalization and
ease of trading these intermediaries find it more profitable for themselves to
export primary goods. Having a look at the exports composition of that time we
can see it mainly comprised of yarn, unbleached fabrics, and low quality madeups that did not create much demand in the international market. Ideally,
Globalization was a mean to reallocate units and resources, get maximum
advantage, and highest value addition, to attain competitive edge. Nevertheless,
Pakistan failed to attract much investment while other countries reallocated
their units to cheaper countries such as Indonesia and Thailand.
Current Situation3:
Pakistan is the worlds 4th largest producer and 3rd largest consumer of
cotton. The Textile and Clothing Industry has been the main driver of the
economy for the last 50 years in terms of foreign currency earnings and jobs
creation. The Textile and Clothing Industry will continue to be an important
1
Textile Industry of Pakistan An Overview
Economic Survey of Pakistan (2010)
427
engine for future growth of the economy; there is no alternative industry or

service sector that has the potential to benefit the economy with foreign
currency earnings and new job creation, especially if synergy is developed
amongst different subsectors and efforts are made to aggressively grow the
ReadyMade Clothing Sector. Pakistans Textile Industry had proved its strength
in global market during the last four decades. It has proved its strength even in
post quota era by not only sustaining its position but, also showing growth
during 2005 to 2007, but declined to $11.1 billion in 2008 due to financial and
economic meltdown globally. The Garment Sector & especially the Knit
Garment Sector need special focus in future policies.
It has an overall integrated structure with an important indigenous cotton
crop, increasing man-Made Fibre production, large spinning, weaving, and
knitting, dyeing/printing and finishing capacities as well as expanding garment

and home textile industries.
Structure of Textile Industry of Pakistan
Source: Textile Commissioner Organization (July 2006)
The Textile & Clothing trade has increased, from US$ 212 Billion in 1990 to
US$ 612.1 Billion in 2008. The clothing trade is growing at a faster rate.
527
Pakistan exported textiles worth $7.19 Billion and clothing worth $3.9 Billion
in 2008. The year 2009 was dismal period. The industry was confronted with
problems of multiple natures. The global economic crisis in Oct. 2007 had
impacted the trade badly. Weaker demand in the developed economies limited
the expansion of global trade. The 12% drop in the volume of world trade in
2009 was larger than most economists had predicted. World trade and output
are currently in a recovery phase. The WTO Secretariat estimates that in year
2010 world exports in volume terms will grow by 9.5%, developed economies
exports will expand 7.5%. The current decline in exports of all manufactured
goods including Textile & Clothing is visible in the quarterly data.
Source: Economic Survey of Pakistan
(2010)
US imports of textiles and clothing fell for the second year in succession in
2009, by 7.5% to 46.6 billion square meters equivalent (SME), following a 5.2%
drop in 2008which was the first decline since 2001. Within the 2009 total,
fabric imports fell by 5.4%, imports of apparel by 6.1%, imports of madeup
textiles by 8.5% and yarn imports by 18.4%. Of these four categories, apparel
continued to account for the highest share of total imports. The average price of
US textile and clothing imports fell for the first time in three years in 2009, to a
new low of US$1.74 per SME.
The period of heavy investment boom in most Textile Industry segments
between 2003 and 2007 came to an abrupt end in 2008. This investment boom
until 2007 was due to the phase out of traditional quota regime under WTO
Agreement on Textile and clothing and Chinas integration into WTO
structures. Global yarn and fabric productions were continuously falling since
the second quarter of 2008. Despite challenges, there are fundamental aspects
that promise a bright future for the textile industry in general.
Competitive Advantage:
627
Theory of Competitive Advantage can be traced back to the initial development

of Economics as a separate discipline. Classical Economist such as Adam
Smith, Thomas Malthus, and specially David Ricardo gave immense attention
to producing what the nation is best at and then take advantage of that edge
through free trade.
However, all these economists talked about factor endowments (such as Land,
Labour, and Capital) and macroeconomics for the growth and development.
Using these factors effectively would give a country an edge over others.
With the further development of study of Economics and overall economic
condition of the world with massive industrialization and liberalization of trade,
classical macroeconomic theory was insufficient to explain the growth and
development of some countries that lacked the availability of the factors, of the
kind mentioned in the theories. Some economists of that time started to take
into consideration other factors that could play pivotal role in a countrys
growth such as Technology, capital-labour ratio etc. Still, no one thought about
giving it a micro level look.
This is what Michael Porter discovered and came up with the six forces model,
through which any country can determine its strengths, weaknesses,
opportunities and threats (SWOT) and then put these into consideration before
making any decision. The Diamond Porter Model so called because the six
factors collaboratively work together to give a country a picture of where it is
standing.
Diamond-Porter Model:
Diamond Porter Model is presented by Michael Porter in his book The
Competitive Advantage of Nations. It helps in understanding the competitive
position of a nation in the global world.
727
Michael Porter integrated some knowledge of industrial economics and

business strategy to come up with a comprehensive solution to complex
problems in competitiveness. He believed that macroeconomic stability itself
does not guarantee prosperity and so tried to give competitiveness a constantly
evolving micro framework unlike macro overview of traditional theories. He
clearly distinguished between the competitiveness of the firms from that of
nations. In contrast to traditional theories of comparative advantage which
focuses on countrys factor endowments of land, labour and capital, the
diamond porter theory attempts to look at factors affecting immediate business
environment and productive capacity of firms; factor input conditions, demand
conditions, firm strategy and rivalry, and the presence of related and
supporting industries. According to this theory, the process of economic
development is about improving this diamond so as to achieve higher and
sustainable productivity.
The traditional theories talk about labour specialization and efficient use of
available sources and economies of scale through large scale production;
827
however in view of diamond porter model the process of specialization cannot

be done with one firm, a cluster is needed that results in efficiency gains. He
gave examples of many cluster initiatives that has driven competitiveness to a
new level including Silicon Valley, Financial Services in New York, and the
Hollywood entertainment cluster. Regarding the role of government in this
model is to act as a catalyst, establishing macroeconomic stability and
providing stable political, legal and social institutions to help companies
improve their competitive position.
To
measure
level
of
competitiveness,
Porter
introduced
Business
Competitiveness Index (BCI) and Growth Competitiveness Index (GCI). BCI

captures a countrys standard of living and a broad perspective about quality of
microeconomic environment where as GCI sketch out economic dynamism
pointing
towards
quality
of
public
institutions
and
macroeconomic
environment. Both indices though highly correlated are individually critical to

the measure of quality of micro and macro dimension of the economy.
Hence from the diagram it can be clearly seen what six forces have comprised
the Diamond Porter Model:
i) Factor Conditions Factors of Production such as physical resources,
human
resources,
capital
resources
and
Infrastructure
(Special
resources can be created to compensate for factor disadvantages)

ii) Demand Conditions both in the domestic and foreign market
iii) Related and Supporting Industries Supply chain industries (Upward
and Downward linkages e.g. providers of raw material, distributors etc)
iv) Firm Strategy, Structure, and Rivalry Organizational goal and presence
of intense rivalry
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v) Government Government interventions can affect all of the above

factors at local, regional, national and supranational or international
level
vi) Chance factors that are outside the control of a firm
A firm is profitable if the value it commands exceeds the costs involved in

creating the product. Creating value for buyers that exceeds the cost of doing so
is the goal of any generic strategy. Value, instead of cost, must be used in
analyzing competitive position ... (Ibid)
To attain the competitive advantage, Michael Porter has catalogued three types
of generic strategies through which competitive advantage can be pursued.
These strategies are:
a) Cost Leadership Firm sets out to become the lowest cost producer in
the particular industry (price wars)
b) Differentiation Firm seeks to be the best performer in the industry
(having a special attribute in the product or service that others do not
offer)
c) Initiative Focus Firm looks to exploit a niche market (targeting a group
within the market of that industry and create loyalty)
The strategies vary according to the position of the industry in the diamond
analysis besides its organizational structure and culture. For example if a
countrys industry is lying in the factor conditions that is it has advantage over
factors of production, then cost minimizing strategy proposed by the Porter
would be the plan to maintain its competitive edge.
Literature Review
1027
In this section, the reviews have been organized according to the factor forces of
the Diamond Porter Model.
Diamond Competitive factors Confronting Pakistans Textile Industry:
i) Factor Conditions:
As Textiles and Apparel cluster involves diverse set of activities requiring
different of inputs, a detailed analysis of factors conditions across the
value chain is required.
The recently announced increase in the minimum wages of the workers has left
the industries with higher cost of production. Once having an edge over cheap
availability of labour, Pakistan no longer holds this competitive advantage since
labour in Bangladesh and Vietnam are more low-priced (Hoekman & Winters,
2005). And so the costs faced by the industry have largely offset the advantage
of cheap labour. The following diagram 4 pictures the factor conditions over the
value-chain.
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According to a study of Pakistani textile and apparel sector (Raptis, 2009)

some of the garment units were over-staffed by 57 per cent. That was an
internal negative factor whereas external factors included no duty-free
market access to the EU and negative image and perception of Pakistan
abroad.
Labour productivity is very low. Our regional competitors take 75 minutes
to complete and produce one piece of cloth whereas we take 133 minutes
for the same work. We also waste 30 percent in finishing and 12 percent in
washing. (Mirza Ikhtiar Baig)
Moreover, the textile looms and other equipments have become obsolete
due to insufficient timely investment and modernization. One of major
reason might be the rising interest rate which has crippled the small
investors and made them risk-averse (Mukhtar, 2008).
inadequate
capital,
textile
industry
is
unable
to
equip
So, with
efficient
machineries for effective production. Although in the current fiscal year,

investments in the import of new textile machineries have shown a
gradual increase5 (14.2%), showing better trend for future.
The companies are downsizing, production units are shutting down;
around 500,000 of the workers have already lost their jobs. After
surviving from the load-shedding scenario the industry has yet to survive
the gas load shedding scenario. LESCO has informed the industry that it
would not supply power for the additional load and only the sanctioned
load will be supplied during the winter months (Fayyaz, 2008). According
to Pakistan textile industry association, 90 percent of Pakistan's textile
industry is losing money losses and facing closure. More than two
months of production has been lost due to power cuts and gas shortages.
Economic Survey of Pakistan (2010)
1227
The lack of Research and Development in the cotton sector of Pakistan

has resulted in low quality of cotton as compared to rest of the South
Asia (Mehta, 1996). Subsequently, due to low profitability in cotton crops,
farmers are shifting to other high return cash crops such as Sugarcane.
In Punjab alone, the cotton sown in 2008 was less by 1.14 percent
relative to that of last year.
Gaps in skill set of labour force only add to the problem of low
productivity. Informal apprenticeship mechanism (Shagirdi) is the
dominant form of skill transfer which eventually leads to inconsistencies
in product quality. Ultimately, these inhibiting factor conditions, such as
low quality of raw material, poor technology and insufficient skills, lead
to low value addition and high defect rates. For example, 40% of exported
fabric was grey in 2000an indicator of low value addition. Similarly, the
defect rate at the processing/printing stage was 10% (SMEDA, 2000).
ii) Demand Conditions:
Due to higher costs of production in Pakistan relative to Bangladesh and
India, Pakistan has lost much of its market since it was unable to provide
good quality cheaper raw material. Yet, Pakistan has cheaper inputs of
production as compared to other countries of the world. Owing to the
undiversified value added textile goods, Pakistan does not have a vast
network of trading partners. Only a limited number of markets have been
explored with limited number of customers. Some of its trading partners
are: USA, European countries, Middle-East, Hong-Kong, Singapore, and
Thailand etc.
Pakistan has a very low share of the international textile market. China
tops the US market with a share of 36 percent followed by Bangladesh 21
percent, India 18 percent, and Pakistan 13 percent. Additionally, in the
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European market, China tops again with a share of 29 percent, Vietnam

28 percent, India 19 percent, and Pakistan only 1.5 percent (Baig, 2009).
However, on the bright side of current events, because of a global
shortage in availability of cotton, largely due to a shortfall in Chinese
crop,
the foreign
demand for Pakistans
cotton
yarn has risen
exceptionally in the current fiscal year of 2009-10. Chinese, in particular,

have procured huge quantities of yarn from Pakistan, even though they
are the fiercest competitor of Pakistan in the world market. Textiles are
exported in the form of Yarn, Fabric, Readymade Garments, and Bed
Wear & Made Ups. Past Global Export performance of Pakistans textile
can be viewed in following table.
Export of Textile and Clothing (Us

1990
2000
World Textile
104,354 157,295
World Clothing 108,129 197,722
Total
212,483 355,017
Pakistan
2,663
4,532
Textile
Pakistan
1,014
2,144
Clothing
Total
3,677
6,676
% of World
1.73%
1.88%
Trade
$ millions)
2004
2005
195,541 202,657
260,569 276,802
456,110 479,479
2006
220,367
309,142
529,509
2007
240,364
345,830
586,194
2008
250,198
361,888
613,086
6,125
7,087
7,469
7,371
7,186
3,026
3,604
3,907
3,806
3,906
9,151
10,691
11,376
11,177
11,092
2.01%
2.23%
2.15%
1.91%
1.81%
Source: Ministry of Textile
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After the reduction in the quota in March 2010, local production and
demand has been improved but that has not contributed in the windfall
gain due to rising costs of production and loss of production units due to
laying-off of workers and load shedding.
iii) Related and Supporting Industries:
The growth of related industries in the textile cluster has largely taken
place in the informal sector in a very haphazard manner. There are
examples of organic clustering but a conscious effort on the part of
industry players or government to promote a cluster based approach
have always lacked. Generally, the capacity of related and supporting
industries is often weak with some exceptions. Such as, Faisalabadone
of the largest textile producing cities in Pakistan gives a good examples of
organic clustering and interconnection amongst the members. The
upward and downward linkages of the textile firms come under this
caption. Spinners, weavers, looming sector, jute etc are examples of the
downward linkages of the firms that provide raw materials to the firms;
whereas Apparels Garment, Towels, Hosiery etc are all examples of the
1527
upstream (textile made-ups) industries that add value to the yarn. These
industries play a vital role in providing employment opportunities for
minority (women). Some of these ancillary industries are operational at
both large scale, and small and medium scale level (Rehman, 2010).
Source: (Islam, 2006)
A few of these industries can be briefly discussed as follows:
a.
Cotton Spinning Sector: The Spinning Sector is the most important
segment in the hierarchy of textile production. At present, it is
comprised of 521 textile units (50 composite units and 471
spinning units) with 10.1 Million spindles and 114 thousand rotors
in operation with capacity utilization of 89 percent and 60 percent
b.
respectively, during July March, 200809.

Cloth Sector: The objective is to convert yarn into grey cloth that
can be later dyed according to the demand. However, this often has
resulted in weaving of low quality cloth due to variety of problems
including poor technology, scarcity of quality yarn, lack of
communication facilities, and lack of institutional financing for its
c.
development from unorganized sector to an organized one.

Textile Made-up Sector: This is the most dynamic segment of
Textile Industry. The major product groups are Towels, Tents &
Canvas, Cotton Bags, BedWear, Carpets and Hosiery & Knitwear
& Readymade Garments including Fashion Apparels. If efficiently
functioned, this sector can earn huge profits for Pakistan through
value addition.
iv) Firm Strategy, Structure, and Rivalry:

Most of the firms are operating at small and medium level also termed as
cottage industries, making the textile industry highly fragmented.
Another important characteristic of the textile industry is that firms are
largely dominated by family owned businesses which although may
ensure trust and cost minimization but it also adheres that government
1627
supports may rest in the hands of selected few who has the power to
control major part of the textile products (Islam, 2006). Additionally,
some lobbyists exist in the current systems, who are engaged in practises
that would give them discretionary power to control input prices, making
it expensive for the firms. They can deliberately form a cartel to create
artificial shortages to raise the prices for higher windfall gains. Firms do
not only face competition from rival firms, rather rivals also include
smuggled goods. Most firms in the textile industry of Pakistan have
adopted cost cutting strategies so that they could charge competent
prices. Major players6 of the textile industry of Pakistan are as follows:
a.
b.
c.
Pakistan Major Textile Industries
Abdullah Apparels (Pvt.) Ltd
Gul Ahmed Textile (Pvt.) Ltd
Lucky Fashion industries (Pvt.) Ltd
Afroze Textile Industries (Pvt.) Ltd
Al-Karam Textile Mills (Pvt.) Ltd
Kohenoor Textile Industries (Pvt.) Ltd
Crescent Garment Industries (Pvt.) Ltd
Baig Spinning Mills Ltd
Dawood Cotton Mills Ltd
Dewaan Textile Mills Ltd
Al-Ameen Denim Mills (Pvt.) Ltd
Ishaq Towel Factor
Feroze Textile Mills (Pvt.) Ltd

Textile Industry Associations
All Pakistan Textile Mills Association-APTMA
Pakistan Cotton Ginners Association
All Pakistan Cloth Exporters Association
Towel Manufacturers Association
Pakistan Readymade Garments Manufacturers and

Exporters Association
Agriculture Universities and Colleges
Pakistan Agricultural Research Council/ National
Agricultural Research Centre
Nuclear Institute for Agriculture and Biology
Central Cotton Research Institute Multan
National Textile University
Extracted from the website of APTMA (www.aptma.org.pk)
1727
Textile Institute of Pakistan
Pakistan Institute of Fashion Design
Garment Weaving and Finishing Institute

Textile specific Research and Development Institutes
Pakistan Central Cotton Committee
Textiles Commissioners Organization
Pakistan Cotton Standards Institute
d.
v) Government:
Due to imposition of high duties, Pakistans textile has no choice but to
raise its prices. Pakistan is purchasing cotton at higher prices with the
additional 15% duty on its import. And then along with the rising costs
of production and governments contemplation, to charge export duty to
ensure local availability of yarn, have made it impossible for Pakistan to
compete against other major players of textile in the global market such
as China, Nepal, Bangladesh and India. As a result of this, 50 textile
units have been shut down because of the declining and negative profits
of the textile firms (Ahmed, 2010).
Despite of this, the tightening on monetary policy and corresponding
expansion of the fiscal policy have drastically increased the interest rates,
due to which firms are lacking the availability of capital and credit. And
for up gradation of the obsolete textile units, more capital investment is
needed.
Subsidies provided by the government are inefficient to bring a
trickledown effect to the lower level workers. This could be the reason of
inefficient, un-willing and un-authoritative role of government, and high
levels of corruption.
According to the current status, government has taken some initiatives
to reduce the cost of doing business by introducing export loan scheme
by the name of Long Term Financing of Export Oriented Projects (LTF1827
EOP); marketing and business facilitation through Expo centre and

exhibitions by Export Promotion Bureau to attract potential buyers from
all over the world; and for infrastructural development Special Export
Zone has been setup in Karachi called as Textile City, Garment city has
been
established
in
Lahore,
Faisalabad
and
Karachi,
and
Skill
development institute have been initiated to train workers in the

production of contamination free cotton (Meier, 2007).
vi) Chance:
Pakistans textile industry has had many opportunities to explore new
markets and penetrate into largest market segments than the current
concentrated one. However, what seems to be lacking is the will power of
the firm owners. They always have this opinion that government should
provide them tax credits and subsidies so that they could have more
capital at hand for re-investments. By improvising on the quality of
cotton yarn and fabric, Pakistan can reduce its costs, improve its exports
and gain its comparative advantage over other countries.
Conclusion
SWOT analysis of Textile Industry of Pakistan:
It can be inferred from the literature that Pakistan is laying at the first force,
i.e. Factor Conditions with limited or insufficient focus on other forces. And so,
to attain competitive advantage the appropriate strategy according to Porter
Model would be Cost minimizing Strategy. By Cost-minimizing strategy the
textile industry of Pakistan would be in a better position to compete in the
world market and can then proceed to the next level i.e. product differentiation
strategy to increase the product and market base. For further examination of
what can be inferred from the study about the textile industry of Pakistan,
1927
SWOT analysis is done. SWOT will draw a picture of the industry as a whole
about its strengths, weaknesses, threats and opportunities.
i)
Strength
Largest foreign exchange earner
Largest employer of Labour force
Availability of low-cost Labour and Land
Abundant in raw material (particularly Cotton)
Availability of low-cost machinery
Major part of textile goods are from man-made fibre rather than
synthetic one
ii)
Weakness
low-price image and reliability
Incompetent marketing
Noncompliance to Environmental and social regulation
Inadequate infrastructure, including power, water
Poor road network not able to provide foundation for a dynamic

industrial sector
Deficient
technology
and
outdated
machinery
leading
productivity and poor quality
Lack of considerable up gradation of human resource skills
Poor coordination among cluster players
Lack of finance and capital to small enterprises

2027
to
low
iii)
Opportunities
The state-of-the-art facilities at the Textile City which is being set up
at Karachi, is a good opportunity to help increase production and
competitiveness of textile products
Enhanced market accessibility for Pakistan Textile products in the

Global Market
Rising cost of Chinas cotton due to excess of demand, is an

opportunity for Pakistan to take advantage of high priced world
market price
With technological advancements, the textile industry can ensure

uncontaminated good quality cotton and cloth
Pakistan is abundant in man-made cotton fibre that assures good

quality cloth. But the firm owners and investors must think of ways
synthetic textiles can be made so as to control the rising prices of raw
material
The Textile Asia Exhibition provide opportunities to SMEs, especially

who instead of having the need to go abroad and see various markets
themselves are able to interact with all foreign delegates, industrialists
present here and showcase their products
Textile engineering sector will generate employment opportunities.

There is ample scope for qualified engineers in mechanical, electric
and electronics disciplines to boost this sector
iv)
Threats
Declining world share in export of textile products means Pakistan is

losing some markets in the hands of others
2127
Limited Value Addition and low product differentiation
Endemic issue of Political and Social volatility in the country
Poor governance would repeal the Foreign Direct Investments
India and China are giving hard time to Pakistan in terms of

advancements in technological innovation with strong engineering
process
Insufficient investment in infrastructure and workforce would result

in efficiency loss and create impediments in future as well
Lack of quality production would make customers switch to other

countries reducing the market segment
Rise in prices of inputs due to IMF policies, would further deteriorate

the condition
Policy Implications
The need for improving business environment cannot be overemphasized.
Without improving the countrys image, enhancing the effectiveness of legal
and regulatory institutions, and upgrading the physical infrastructure, direct
incentives to local and foreign investors are less likely to yield desirable results.
The current government is well cognizant of this need and has shown some
visible progress in the macroeconomic management to restore the confidence of
investors and businesses. However, there is need to do more on improving the
governance side.
Key Challenges faced by Textile

Cluster
2227
Factor Conditions
Availability of quality raw
material
Lack of skills
Poor technology
Demand Conditions
Increasing sophistication of
demand e.g. product and
process standards
Increasing global
competition
Related and Support
Industries
Gaps in the quality of local
supplies
Poor coordination among
cluster players
Lack of finance to small
enterprises
Context for Firm Strategy
& Rivalry
i)
Addressing the Country Level Challenges:

Following steps are needed to address the critical issues that the country
as a whole is facing:
Restore the autonomy of legal institutions
Bring reforms in government agencies
devise and launch a global communication program with the help of

international media to improve the image of the country
Encourage private sector, increase public expenditure, and work with

international institutions such as the World Bank and Asian
Development Bank to improve the infrastructure particularly Energy
by exploiting the huge hydroelectricity and coal-power potential
available in the country
2327
Diversify the export portfolio by facilitating the development of

multiple
clusters
particularly
in
the
areas
of
logistics
and
communication, medical devices, horticulture, and tourism

ii)
Addressing the Cluster Level Challenges:

As noted before, the current government has taken some very important
steps to upgrade the Textiles and Apparel cluster in Pakistan.
The emphasis of newly instituted policies and programs is to increase

the productivity and unit value realization through increase uptake of
better technology
Greater value addition and product diversification
Need for greater involvement of other actors by developing a shared

vision such as supporting industries and IFCs to accelerate the
progress
iii)
Involvement of Private Sector and other IFCs:

A transition from the existing low-end product concentration towards
a more diversified one
High unit value product portfolio through easy access to quality raw
material, technology up gradation, skill development, and R&D in
product and process development
A further shift towards facilitative role of government through

enhancing its role in financing R&D in product and process
development, promoting public-private partnerships, and reducing the
barriers to trade
2427
As textile sector is the major foreign exchange earner, therefore we

should increase our exports by improving both the quality and
quantity to meet the challenges of the post quota era
We must increase the quantity by increasing the capacity of the

existing mills and also by opening new textile mills. We should also
improve the quality of the existing machines
APTMA and the government should join hands for bridging the skill
gap as there was a need to promote public-private partnership in this
regard to achieve the desired results
Regular National Exhibitions can be very helpful in bringing out the

skills, the range of products and opportunities of group collaboration.
It will help the planners and large scale engineering industry in
defining the way for developing skills in order to make this sector
strong and viable
The Ministry of Textiles Industry needs to be founded on active

private-public collaboration. It should be consumer-friendly and
services-oriented
The Pakistan Government also needs to focus on the countrys image

building in the global market and Pakistan Consulate in various
countries need to play their pivotal role rather than enjoying the
Foreign Service benefits at the cost of the tax payers
Another resolution demanded that knitwear classes should be

introduced in the National Textile Engineering College, Faisalabad, so
that hosiery products of international standard could be produced
Stressed is laid upon the government to direct authorities concerned

for installing master treatment plants in industrial areas so that
effluent released by factories could be utilized for irrigation purposes
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The tariffs should be reduced to control the prices of textile goods
Reference
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Months. (T. Nation, Interviewer)
Baig, M. I. (2009). (T. News, Editor)
Fayyaz, A. (2008). Overview of the Textile Industry of Pakistan.
Hoekman, B., & Winters, L. A. (2005). Trade and Employment: Stylized Facts
and Research Findings. Washington D.C.: World Bank Policy Research
Working Paper no. 3676.
Islam, F. U. (2006). Clustering in Pakistan's Textile Industry: Comparative

Analysis of Clustered and Non-Clustered Firms. PhD Working Paper Series.
Latif, M. M. (2000, October 16). Textile industry has the largest potential to
boost Pakistan's exports. (S. H. Kazmi, Interviewer)
Mehta, R. (1996). Textile and Apparel Trade: Impact of 'New Regionalism'.

Economic and Political Weekly, Vol. 31, No. 23.
Meier, R. (2007, September 26). Textile Industry of Pakistan. (C. G. Karachi,

Compiler) Business Network Switzerland.
Mukhtar, A. (2008, April 17). Insight into the Problems facing Pakistans
Textile Industry. Lahore.
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Raptis, C. (2009, January 29). International Comparison of the Hourly

Labour Cost in the Primary Textile Industry 2008. New Twist , 6.
Rehman, H.-u. (2010). Manufacturing. Economic Survey of Pakistan , pp. 4349.
SMEDA. (2000). Draft Textile Vision 2005. Small and Medium Enterprise
Development Authority.
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Analysis of Textile Industry of Pakistan

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